Creditworthiness Assessment Bill [HL]
 - Committee

Clause 1: Assessing the affordability of borrower's creditworthiness

Amendment 1

Moved by Lord Blencathra
1: Clause 1, page 1, line 4, leave out “must” and insert “may”

Lord Blencathra: My Lords, I beg to move the amendment in the name of my noble friend Lord Naseby. He cannot be here today but he has asked me to make it clear that he is not opposed to the principle of this Bill, as am I, but he is worried that it ties the hands of the FCA and is too prescriptive. That is why he seeks to delete the word “must” in the first group of amendments and substitute it with “may”; rather than the instruction to the FCA to “ensure that”, he suggests “consider whether”; and the word “should” in the final amendment in the group is a grammatical change.
In all of these amendments he was guided by the advice of the Consumer Credit Association and I would like to justify the amendments by explaining the CCA’s concerns. I want to set out this properly in this group so that there is no misunderstanding where my noble friend is coming from—the amendments are not a rabid desire for unfettered market forces. These are not so much probing amendments as airing amendments, if your Lordships’ will accept the term, to air the concerns of the CCA. I know that the noble Lord, Lord Bird, with his tremendous experience in this matter, has considered them and will have impeccable detailed arguments against them. If that is the case, then we will have succeeded in airing these amendments today.
The Consumer Credit Association says that it is not against the general evaluation of credit referencing systems; however, they consider it inappropriate and disproportionate for the law to force firms to use and pay for rental data—or any other specific type of data—in their commercial assessment. It is concerned about what it calls unintended consequences.
At face value, most people would think that requiring lenders to use more data would inevitably lead to better decisions and improved consumer outcomes. However, a number of complexities appear not to have been properly considered, says the Consumer Credit Association. For instance, the rents of just under 4 million households—that is 40% of the rental market—are subsidised via housing benefit to the extent of about £5,000 per household per year. This means that the rent payments in these cases reflect receipt of subsidy rather than a tenant’s propensity to pay. Where the subsidy is paid direct to the landlord, this effect is even more pronounced. In the same vein, non-payment of rent may often reflect delays in paying the benefit rather than the unreliability of the tenant. It also says  that well over 1 million tenants are already in arrears on their rent. The proposal would not help this large group; on the contrary, these consumers would find it more difficult to access credit and would therefore become even more financially excluded.
The collection and use of rental data is being marketed to landlords as a means of reducing arrears. The proposal would give unscrupulous landlords who fail to repair their properties increased leverage over tenants, because it would increase the risks for a tenant making any reasonable attempt to withhold or set aside their rent against getting repairs done to the building.
The CCA also says that it is not a given that council tax and rental data would add value for all types of lenders in all situations, yet all firms would be required to pay for this data whether or not they used it. This would be commercially inefficient and the cost would be passed on to consumers through higher prices for credit. It is the CCA’s strong view that firms are the best judges of whether it makes commercial sense for them to subscribe to products such as rental exchange and credit lending. Compelling them by law to do so would, on the other hand, be inappropriate.
Consumer representatives are divided on the potential impacts of the proposal but have flagged the risks of possible harm to some consumers. The Centre for Responsible Credit, for example, has urged caution, because failure to pay rent could lead to the loss of a home, bailiff action and, ultimately, imprisonment. Mainstream lenders are unlikely to consider the data predictive. For many people who miss a rental or council tax payment, it could lead to complete credit exclusion or higher cost credit.
The rollout of universal credit is expected to lead to a significant increase in rent arrears for housing benefit claimants. Similarly, private tenants face rising rents and a freeze on local housing allowance rates. In evidence to the Treasury Select Committee on 28 February this year, both StepChange and Citizens Advice acknowledged the potential negative impact. StepChange said:
“That is fine if the thing that is going to be included is something that you are paying well and on time. If you are behind on your rent and your council tax payment, all that is going to do is enhance the social exclusion for those individuals”.
Matt Upton of Citizens Advice said:
“It is important to acknowledge that it is a double-edged sword. As you say, we see lots of people struggling to pay those bills, and that will not necessarily affect them in a positive way … of the clients we see who struggle to access credit there is a proportion for whom credit referencing is a factor. For a greater proportion it is not the big factor”.
The ambition to increase access to credit for those who rent is laudable. As said by the noble Lord, Lord Bird, I believe that it will help about 80% of tenants, but the CCA says that the proposal’s potential benefits are uncertain, unquantified and currently unsupported by robust independent evidence. My noble friend Lord Naseby thinks that more studies on this must be done but he respects the point of the noble Lord, Lord Bird, that millions of honest, hard-working tenants who pay their rent and council tax would benefit from having their good record of payments used to get a mortgage or cheaper white goods.
I know that the noble Lord, Lord Bird, is keen to pick up the 20% who are in debt and seek ways to get them out of that hole, but my noble friend finds the CCA’s worries and concerns quite persuasive. As I read them, I found them persuasive too. I look forward to the answers of the noble Lord, Lord Bird, and the Minister. All we wanted to do was give these amendments an airing, raise the CCA’s concerns and wait to hear the answer.

Baroness Lister of Burtersett: My Lords, I am very supportive of what the noble Lord, Lord Bird, is trying to achieve with the Bill. I have to admit, I was not aware of the issue until I read the debates on it and the Big Issue article he wrote.
I also have some worries about the potential unintended consequences raised by the noble Lord, Lord Blencathra, which I have communicated to the noble Lord, Lord Bird. We have to think about the context: more people are getting into rent arrears, partly because of universal credit and partly because of cuts to the benefits they rely on—in or out of work—at a time of rising rents. We know that council tax arrears are also going up because of what has happened to the council tax support system. This group of people will not be helped by the Bill. That is understandable: the Bill will help those with a good record, which is very useful and important. In his reply, I would like the noble Lord, Lord Bird, to assure the House that things will not rebound on that group and that they will not be in a worse position than they otherwise would have been. It would be helpful to have that assurance on the record.

Baroness Thornton: My Lords, I supported the noble Lord, Lord Bird, on Second Reading. This Bill is a small but important public policy step to help bring creditworthiness equality to people who are good payers of rent and credit. The questions asked by my noble friend and the noble Lord, Lord Blencathra, are important.
First, this is not the silver bullet to solve the problems of creditworthiness; it is one thing that might assist. If the Bill passes and lenders are required to incorporate rental data, individuals can opt out of any system of rental payment data sharing. That is the first thing that needs to be put on the record. For most, the inclusion of such data is part of a positive journey to more equal access to affordable credit, although I agree that it is vital to be guided by those who are not as fortunate, including those let down in various ways.
Missed or late payments from a third party, including from the DWP, can already be noted on an individual’s credit file through what is known as a “notice of correction”. This principle is applied to any “notified payment” on an individual’s credit file, including a spousal dispute, incorrect calculation or late payment. Although I agree that it is right to be alive to the laws of unintended consequences, here, the consumer would be in control. That is very important. They can opt out and add notices to their credit file. As we will no doubt be looking into after the APPG inquiry, rental payments and electricity payments are normally the last things that an individual fails to pay. For people in this situation, any previous non-payment of non-essential  items will already have affected their credit score, but if we can help these people, we should. I hope that the work being led by John Glen MP and HM Treasury with the noble Lord, Lord Bates—we had a very useful discussion about this—is taking this important consideration into account via the Rent Recognition Challenge. The noble Lord, Lord Bird, will raise this point later with the noble Lord, Lord Bates, and discussions are ongoing.
Reforming the consumer credit world is a big undertaking. Although we may not be able to immediately change someone’s circumstances through this measure, we may be able to better support them and prevent them getting further into the quagmire of problem debt. As the FCA put it to the noble Lord, Lord Bird, before Second Reading, it is important to know who is in trouble to,
“get our arms around them and help them”.
I thought that quote was very appropriate.

Baroness Kramer: My Lords, I am a real fan of the unamended version of the Bill. Some 40 years ago, when I was in my early 20s and trying to get credit for the first time, I remember the struggles—I think that most women will share them because of the era—of trying to establish any kind of credit history and demonstrate that I was reliable and could manage my finances and the stresses and strains of all of that. I had to go through the most convoluted routes to establish that history. In the Bill, the noble Lord, Lord Bird, has captured the opportunity for many people to use their reliability in making key payments—rent and council tax—to establish credit history. In some ways, the noble Lord, Lord Blencathra, gave the game away when he mentioned, very early, that part of the industry’s resistance is based simply on the cost of gathering this data. I really do not think that that should be an obstacle to so many people who demonstrate in their lives that they are capable of managing money being able to make the decision that they need to access credit and have a reasonable avenue to do so.

Baroness Grender: My Lords, we on these Benches fully support the Bill as originally drafted and therefore oppose the amendments in group one for all the reasons set out so far by other Members. Renters are such a large part of the population now. They have every right to be full participants as consumers. I will give a very specific example: if you are a renter in social housing—78% of renters in social housing pay their rent in full and on time—and you go to buy a washing machine, currently, because you are described as high risk, you will pay between £300 and £1,000 more. Could somebody please explain to me how it is possible that someone can steer clear of arrears when they are in a scenario where, if they are not an owner-occupier, they pay between £300 and £1,000 more for a washing machine? We need to stand firm on the current wording in the Bill and not allow this probing amendment to be aired. A small change in the renting threshold would mean that an additional 4.8 million consumers would be more attracted to mainstream and lower-cost renting.
On arrears, while I understand that this is a point of concern, the whole point of this is to bring people who are renters into the sunlight with information about them.  The FCA has also said that it would be good to know who these people are. The alternative is unscrupulous lenders. That is where we drive people to if they are not in the full sunlight of creditworthiness and there is data about them. For those very brief reasons, we urge noble Lords to reject these amendments and to understand that renters are increasing in number. Just today the BBC announced that the proportion of 35 to 54 year-olds who live as private tenants has nearly doubled in 10 years since 2006. The real problem is that the number of people who are renting is doubling but government policy is not keeping pace with this scenario. This very fine Bill tries to do so.

Lord Desai: My Lords, I did not speak in the Second Reading debate but I add my support to the Bill sponsored by the noble Lord, Lord Bird, and speak against the amendment. The Second Reading debate showed that several things were being put together and confused. The Bill’s purpose is simple. Obviously the problem is that the poor do not get access to credit, or they do at very high interest rates. That is not the problem that would be solved here. There is also the problem that lots of people are in arrears. If they are they will have a low credit rating. That is often as true for owners. That is not a problem.
The virtue of the Bill is to say that if people are behaving like regular, honest payers of their debt on time they ought to get some sort of compensation or reward for that. If people are paying rent regularly they should be treated on par with those who pay their mortgage regularly. It is such a simple idea that I do not know why people are upset about it. For one thing, the cost of recording payments is much lower than it used to be because they are completely automatic. If we can tell the FCA to persuade people to get into a blockchain system that would be a very efficient way of recording payments, both on the part of the landlord who receives it and the tenant who pays it. It would be very easy to build up a databank of regular payments. From there we could easily get on to some sort of financial app that will give them the credit they deserve.
If we keep the Bill to this particularly narrow but very useful aim we should be very happy to support it. It is required that we do not treat two groups of virtuous people unequally. Those who pay their mortgage on time and those who pay their rent on time should be treated equally because they are both behaving honestly.

Baroness Gardner of Parkes: My Lords, I listened very carefully to what my noble friend said in introducing the amendment, but I really think it is a very bad amendment. It throws out the whole value of the Bill completely. It would just reinstate the current position. That is not what we are aiming to do. We are aiming to make this possible for people who really have no knowledge or awareness of finance or how to do things. These people would be the very ones to be overlooked with a “may”, because they do not push themselves forward in the same way, yet they need the information and the help, certainly if they have been good payers of rent. I remember when I was looking to get a mortgage for the first house I ever bought—I did not succeed in getting one at the time. The whole house cost £7,500, which in those days was a lot of money.  A dental chair-side assistant was paid two pounds 10 shillings a week; a highly skilled receptionist was paid £7. We are talking about a long time ago. Although those were times when I knew nothing whatever about mortgages, these are times when you need help and you want to have your case considered. The more modest you are or willing to be squashed the more you were squashed. It is not a good amendment and I am sorry to say that I cannot support my noble friend on it. I want to retain the status quo in the original wording of the Bill, which would be very much more helpful to those who need help.

Baroness Tyler of Enfield: My Lords, I also support the Bill in its original unamended form. I will explain briefly why. I apologise that I was unable to be present at Second Reading. As others have already said, I fundamentally believe that there should be parity of treatment between tenants and homeowners.
I had the privilege of chairing the Lords Select Committee on Financial Exclusion last year, which explored the connection between consumer credit and financial exclusion. We heard that for the many low-income households without financial safeguards, credit, including high-cost, short-term loans, was the only way of keeping on top of family finances for regular or emergency expenditure. As we all know, this phenomenon is particularly prevalent owing to increasingly precarious work and the casualised forms of employment around, meaning that both income and expenditure needs for individuals and families can easily spike without warning.
It was clear to us—the committee heard this very strongly indeed from the evidence—that consumer credit is increasingly the de facto safety net for many people on low incomes to meet essential needs. But we also heard that many credit agencies do not take rent into account. Most social and private renters therefore often have thin credit histories and do not have access to the lower-cost mainstream lending options. What we heard most of all—this is why I feel so strongly on the issue—is that those people are too often forced to turn to high-cost and predatory sources of credit, such as payday lenders or rent-to-own companies.
Frankly, I was shocked when I heard some of the eye-wateringly high forms of interest on credit and how much it can cost for someone who goes to somewhere such as BrightHouse to buy white goods or something like them. They are paying so much over the odds. This directly contributes to the poverty premium, established to be at around £1,000 per year per person, which is paid by poorer people for products and services because of a lack of consumer credit or creditworthiness. As my noble friend Lady Grender said, this particularly affects young people. On Tuesday this week we heard excellent work from the Intergenerational Commission of the Resolution Foundation that showed that one-third of millennials can now expect to be renting for their entire lives. We have to make sure that policy is in line with the reality of how people live their lives.
The chief executive of BrightHouse gave evidence to our committee in 2016 and made the point that its customers had very few options. It is time to give those people some other options and to bring them back into the mainstream. This Bill does that. It can help redress some of the damage of exclusion and insecurity  that plagues those struggling to make ends meet and prevent an already disadvantaged Generation Rent falling into further cycles of debt and despair. It really is time that we make rent count and it is long overdue that we do.

Baroness Wheatcroft: My Lords, I support the Bill in its unamended form and echo what the noble Baroness, Lady Tyler, just said. BrightHouse had to repay £14.8 million to 384,000 clients last year because the Financial Conduct Authority judged its behaviour to have been unreasonable. The Bill makes available more reasonable credit, although not necessarily the cheapest, to all those who rent.
If you do not have a credit record, life is very dangerous. I went on to the web this morning to see quite what finance was available. Fast Loan UK claims to offer:
“Responsible Loans For Everyday Lives”.
The APR it charges on one of its loans is 907%. That does not sound terribly responsible to me.
One source of reasonable credit for people on very low incomes and who need it most is credit unions. We have often spoken in this House about the need for more credit unions. They do a good job, but there are nowhere near enough—there are 384 members of the credit unions association. However, if you search for “credit union loans” on the internet to find out where you might access them, you come across “Credit Union Loans” with an APR of 277.5%. The irresponsible lenders have twigged that the way to get customers is to pretend to be what they are not. They are not responsible lenders. While I support the Bill in its unamended form, I hope that we might encourage the FCA to police this sort of thing rather more carefully.

Lord Hain: My Lords, the noble Baroness’s point about credit unions is vital. On my way to London early on a Monday morning, I often see people near Neath station queuing outside their credit union. For them, it is a lifeline.

Lord Best: My Lords, from the Cross Benches, I support the noble Lord, Lord Bird, and oppose the amendment. I know that the motivations of the noble Lord concern mostly poorer people who need credit to buy white goods and the rest—we have known for many years that the slogan, “The poor pay more”, has been more than true—but I want to refer to those members of Generation Rent who have a chance, albeit a sometimes slim one, of being homeowners and need every help in getting their creditworthiness to the highest-possible status to move from being a tenant to a homeowner, and who are held back by the way in which credit agencies operate. It may be said that the people in Generation Rent do not wish to be homeowners —that they live an “Uber lifestyle” in which you do not own a car; you call Uber. That can apply to many aspects of life. However, surveys continue to show that people wish to be homeowners and for very good reason: home ownership brings with it security, which you do not get in the private rented sector. Even if  your tenancy is for a full year, a lot of people find that it is hardly enough to enable you to settle down and, certainly, to bring up a family—we are now seeing ever more families in the rented market.
Home ownership remains an aspiration. Although you might be paying more for a mortgage on day one—if the mortgage company can provide a loan for you—rents will rise roughly at the level of earnings, which is RPI or CPI plus 1% or so, year after year and, in 25 or 30 years, those rents will be enormous. When you come to retire as a tenant, a lifetime of tenancy means having to move home on retirement because your income will drop but your rent will keep rising. Home ownership gives you not just the security of tenure but the financial security of knowing that, although it may take 25 or 35 years, eventually you will be free of debt. Anything that inhibits people from breaking into home ownership, which is what people aspire to, is extremely important.
People say, “Nowadays in London and the south-east, what is the point of talking about home ownership? Prices are so far beyond the reach of those on ordinary incomes this will never happen”. We now have planning consents across London for an enormous number of new apartment blocks. We are seeing come out of the ground 520 apartment blocks of more than 20 storeys for residential use. A massive housebuilding programme is coming down the line. Those who have built those apartment blocks, some of them overseas investors, believe that the starting price will be about £500,000 for the majority of the flats. Someone who is on £50,000 a year—there are not that many people on such a salary—will be able to get a mortgage of £250,000 and not £500,000. The trouble is that we are running out of Russians; we are running out of overseas buyers who are prepared to pay £500,000. I predict that home ownership, which has been sharp decline, will come back into fashion. The opportunities will recur; prices will have to come down to meet the incomes of those who aspire to own. We should ensure that the credit lines for them are as clear as possible, which is what the noble Lord, Lord Bird, would do.

Lord Davies of Oldham: My Lords, I indicated at Second Reading that Her Majesty’s Opposition were very much in favour of this Bill. In a debate in Westminster Hall, the shadow Finance Minister made it clear that he too was in favour of it.
I appreciated the way in which the noble Lord, Lord Blencathra, introduced the amendments—it was more probing than assertive. He will have recognised that representatives of almost every part of the Chamber have been against the amendments and said that the Bill should stay as it is in this crucial provision. The noble Lord, Lord Bird, is more qualified than me to respond to all these points and I shall therefore defer to him, but he must have been encouraged by the enormous support across the Chamber for his Bill as it stands.

Lord Kennedy of Southwark: My Lords, I strongly support the Bill in its unamended form and do not support the amendments proposed by the noble Lord, Lord Blencathra. When the noble Lord responds to the debate, can he tell the Committee a little bit more about who the members of the Consumer  Credit Association are? I do not know whether BrightHouse is a member of the CCA, but if he could tell us it would be helpful.
I grew up on a council estate in the 1960s and 1970s. Both my parents worked and made sure that they paid their rent—it was the first thing they ever did. My dad had two jobs to ensure that our rent and rates were paid. It is important that people who meet their financial obligations week in, week out have that taken into account when they seek credit. As the noble Lord, Lord Best, said, it is always the poor who pay more, and that is totally unfair—of course, that goes for many things in life. When I go into my local newsagent, I see people queueing up with their little fobs to get their electricity; they pay more. And there are other things—it is just unfair. What the Bill does, on which I congratulate the noble Lord, Lord Bird, is begin to make sure that, if you have a good credit record, that is taken into account properly, so that when you seek credit you can get a fair price and will not always have to pay the most.

Lord Bates: My Lords, I thank my noble friend Lord Blencathra for moving the amendment, but before I turn to the amendments I shall make some general remarks about the noble Lord, Lord Bird, and his Bill. I should state categorically that the Government’s position is not one of opposition to the purpose he seeks and which so many noble Lords have spoken very powerfully about, which is to ensure that people’s rent or credit history is taken into account when credit decisions are made. The question is about the means by which we achieve that, whether this legislation is the right way to do it and whether we should seek to mandate it.
My noble friends Lady Gardner and Lady Wheatcroft were right to point out that, in effect, the amendments would undermine the Bill because they would give to the Financial Conduct Authority discretion, which in many ways it has at present, to act in these ways should it so wish. The underlying concern is very real, and it is shared by John Glen, the new Economic Secretary to the Treasury, who is working very diligently on this, and it is shared by the Government. We recognise the very real concerns of people on low incomes seeking to access credit.
The report of the committee chaired by the noble Baroness, Lady Tyler, to which the Government have responded, called in its recommendations for having a Minister for financial inclusion, and that is something we have made some progress on. Financial inclusion is very important, and we are building upon a series of measures that we have sought to introduce, starting with the cap on payday lending, to stop the exploitation that was happening, with some of the horrendous interest rates that my noble friend Lady Wheatcroft referred to.
One of the problems was that a lot of the poorest people did not have bank accounts. Therefore, we introduced basic bank accounts, which are fee-free accounts, to get people into that area. Another initiative, which the noble Lord, Lord Desai, talked about, is the use of technology: he referred to blockchain and fintech solutions, which I shall come to shortly. We see great  potential in open banking, allowing people to share their bank records online—their payment history, their incomes and outgoings—with people from whom they might be seeking credit. Again, that may be something that helps in that area.
Several noble Lords talked rightly about the appalling way that the poorest in our society are preyed upon by illegal money lending—loan sharks, as they are referred to. In fact, John Glen, the Economic Secretary, announced less than a month ago, I think, that we will be putting another £5.5 million into the fight against illegal loan sharks in England, Scotland, Wales and Northern Ireland.
The noble Lord, Lord Hain—and, I think, the noble Lord, Lord Kennedy—made reference to credit unions. We see credit unions having a huge role to play in this area: that is one reason why the coalition Government introduced significant investment in credit unions and changed the way in which they can operate. Some £38 million was put into helping credit unions to form, to operate and to raise capital: we think they are a crucial part of seeking to tackle this type of exploitation.
My noble friend Lady Wheatcroft mentioned the rent-to-own process, whereby many people are drawn into some appalling financial deals. This speaks to two problems. The first is that such firms need to be regulated—they are regulated, and that is why the Financial Conduct Authority levied the very heavy fine on them that was referred to, which meant that money went back to customers. The second problem is: where can people go to for advice? Where can they find what credit is available and whether they are paying too much? That was the purpose of trying to create a new single financial guidance body.
I come to the particular measure that is before us. I have to confess—and I am privileged to put on record a certain interest here—that the noble Lord, Lord Bird, is a hero of mine. I think what he has done for the poorest in our society is absolutely heroic, and I have great admiration for him and for what he is seeking to do through this Bill. I have really appreciated the opportunity to have a conversation with him and with the noble Baronesses, Lady Thornton and Lady Lister, to discuss ways to take this forward. One of the solutions we have come up with, since Second Reading in November, is the rent recognition challenge. The rent recognition challenge fund is an alternative if the legislation route is deemed too heavy and too costly. I take the point made by the noble Baroness, Lady Kramer, which I shall come back to, that we should not worry about the cost of collecting the data, but somebody has to pay and therefore if the cost of collecting the data increases, somebody has to pay for that. We thought through this particular problem and asked whether we could try to do this another way by trying to leverage technology. We came up with the rent recognition challenge, a £2 million fund which we announced following the Bill’s introduction.
I pay tribute to the noble Lord, Lord Bird, for persuading us to do that. I have often said to the noble Lord, as somebody who has spent a lot of time introducing Private Members’ Bills from the Back Benches in this House and not getting a great deal of traction, that he  should not underestimate the fact that he has managed to get £2 million out of the Treasury. The noble Baroness, Lady Thornton, says, “Already”. I agree: it is testament to his powers of persuasion.
I want to update the House on something I think is pertinent, because I want to share with noble Lords that we are taking this very seriously. We recognise that there is a problem; it has been identified not just by us. The Financial Conduct Authority published the High-cost Credit Review - Update at the end of January which carried a lot of information and highlighted a lot of the concerns that the noble Lord, Lord Davies, mentioned.
We announced six winners, six fintech firms, who will receive £100,000 each to come up with solutions and will have the opportunity to bid further in July. The first is Bud, which creates open banking technology for lenders to use in their existing apps. Canopy is a deposit-free renting service that replaces the deposit with an insurance policy. CreditLadder is the UK’s first tenant rent reporting service for the private rental sector; it has previously worked with the Big Issue. The META Labs project First Home Coach is an all in one home-buying companion for first-time buyers. Movem is a digital rental passport, allowing comprehensive tenant referencing. RentalStep is a new rental platform that connects landlords and tenants while helping tenants to boost their credit scores. These are real fintech start-ups with cutting-edge people. There was a huge amount of competition for that funding. They are working now to find those solutions.
One of the benefits of the solutions being proposed under the terms of the rent recognition challenge and where we are going with the fintech—I am trying to find my precise note on this; if I get it wrong I will correct it in writing—is precisely this point about what happens with the people who have a poor credit history and poor credit score. Will they get caught up and be doubly disadvantaged by this in seeking to access finance at a reasonable cost? That is why the solutions we are looking at would allow people to opt in to share their financial data or to keep it private. Again, we think that technology offers us some opportunity to do that.
In his powerful contribution, the noble Lord, Lord Best, talked about Generation Rent. We do not want that; we want generation home and we want to give as many opportunities as possible for that to happen. That is why the Government have announced £15 billion as an overall housing package to make that a priority. I am delighted that my noble friend Lady Williams has joined me on the Front Bench. She is now a Minister at the Ministry of Housing, Communities and Local Government. No?

Baroness Williams of Trafford: I was.

Lord Bates: You were? I am sorry.
That is why we now have a Secretary of State for Housing, Communities and Local Government. With all these points I am trying to set out that we do not believe that this Bill is the right way forward because it  is too prescriptive in its approach. The amendments cut across the purpose and effect of the Bill so we do not support them either. But we are mindful of the importance of the responsibility to act in this area and we are doing that in a whole range of areas, as I have outlined to the House today.

Lord Kirkhope of Harrogate: My noble friend Lady Wheatcroft made important remarks about the exorbitant rates charged to people who are often very vulnerable in the impression that they receive when being sold these products. Following those remarks, does my noble friend not agree that the plethora of advertising—particularly on television—which presents itself to these vulnerable people ought to also contain, as in the case of cigarette sales, clear warnings on every such advert that independent advice or advice that might be obtainable through government agencies or others should be taken before anyone commits themselves to such appalling transactions?

Lord Bates: My noble friend is right to draw attention to this. This is why we have the FCA as an independent body to regulate activities in those areas. It is why it took the robust action it did in the case mentioned earlier by the noble Baroness, Lady Wheatcroft.

Lord Campbell of Pittenweem: I am most grateful to the Minister for giving way, particularly since up to now I have been only a spectator to this legislation. I was particularly taken by the fact that he referred to illegal moneylending and the so-called sharks. It is important to remember that the people who have to go to those sharks cannot hope to achieve any kind of credit from the kinds of operations that the noble Baroness, Lady Wheatcroft, referred to. The loan sharks’ weapons are intimidation, abuse and sometimes violence when it comes to recovery. Illegal moneylending is notoriously difficult to prosecute and therefore I would be grateful to hear that the Government understand that and that the initial sum which has been offered is not the end of the matter.

Lord Bates: Just to update the noble Lord on this point: the money that has been announced will help investigate and prosecute illegal lenders and support victims and those vulnerable to loan sharks. Overall, this is a 16% increase in funding. In England £100,000 seized from loan sharks will be spent on encouraging people at risk of being targeted by loan sharks to join a credit union as an alternative. The quadrupling of funding will help vulnerable consumers access a safer form of finance and get their lives back on track.

Lord Kennedy of Southwark: We often hear that financial institutions are fined for doing things wrong. I know that those fines go into the general fund and are used for various things. One good thing they could be used for would be to support the credit union movement so that it can advertise the alternatives that are around. It is not just the monetary fines, it is the fact that the punishment is advising the public to go elsewhere and that there are cheaper alternatives. Often the credit union movement cannot have adverts in the Tube and on the buses and elsewhere, and it cannot fund phone lines. It would be useful and a good way to  deal with fines from financial institutions. Perhaps the Minister will take that back to his colleagues in the Treasury.

Lord Bates: I am very happy to take that back. It is an example of the innovative ideas that we can discuss as alternatives to the measures before us today in terms of legislation. As the noble Lord was speaking, I was thinking of the Libor fines. Those sums were significant —some £600 million or £700 million—but the then Chancellor designated that they would be given to the families of servicemen and the emergency services. There is an example there. My point is that I think there are solutions which would better achieve the effect that the noble Lord, Lord Bird, is rightly trying to achieve.

Baroness Kramer: My Lords, the Minister has been very generous with his time. The virtue of the Bill of the noble Lord, Lord Bird, is its sheer simplicity. So often Governments come up with incredibly fragmented, complex and convoluted attempts to solve a problem. The Minister pointed a moment ago to the cap on payday lending. He will remember that the Government resisted that right to the very last, with exactly the same kinds of arguments about fintech, alternative approaches, different ways of dealing with it, cost and trying to crack a nut with a hammer. But they now laud that cap on payday lending. My suspicion is that if they decided to support the Bill brought forward by the noble Lord, Lord Bird, they would very soon be lauding that solution, its simplicity and its universal application.

Lord Bates: I hear what the noble Baroness says but, as other Members have pointed out in the debate, there is the risk of some unintended consequences as a result of taking this approach. I have also outlined that we are not dismissing the problem, but are seeking an alternative route to solving it which we believe will be more effective and fairer, and avoid some of those unintended consequences. If that turns out not to be the case, of course we are always open to review our position vis-à-vis proposals such as this, and we will continue to act in that way because our first priority is to protect the most vulnerable and help them make a better future for themselves and their families by getting access to home ownership.

Lord Bird: I really enjoyed that. That was a brilliant array of political parties coming together in the House. I am really glad. I am also glad that the noble Lord, Lord Blencathra, introduced the amendments in his name and that of the noble Lord, Lord Naseby, because they allow us to address the laws of unintended consequences. The noble Baroness, Lady Lister, also raised the question.
I come from a long line of people who did not pay credit. I am not likely in my dotage to be grassing up the people I come from. My mother used to go to a doorstep lender, who would direct her to a particular shop, where we paid through the nose over and again in the 1950s, 1960s and 1970s, until she died in absolute poverty in the late 1970s. I am not going to grass these people up, I assure your Lordships. Actually, I am much more interested in the 15% or 20% of people who are going to find it very difficult to get credit. They are finding it very difficult to get credit now.
One of the sure signs of social exclusion is the fact that you cannot go to certain shops or buy in certain areas. You cannot even go to Argos. As has been proved by the work of those such as Jesse Jackson in America, as soon as you move into a situation where you can get ordinary credit like other people do—they call it white man’s credit—that is almost like a nudge towards respectability. As soon as you can start saving a bit of money in a credit union, that is a gradual, psychological move. What we are doing is trying to avoid a problem of unintended consequences for a group of people who, at the moment, are in abject poverty and have an incredibly bad ability to get credit, so that they go to payday shysters, sharks and all sorts of people like that. Those people are there already.
There are the 80% or 85% who the noble Lord, Lord Blencathra, pointed out that I would refer to as being lifted out—the respectable people. Great—let us give them the thumbs-up but let us do what the FCA said when it came to see us in the House. It said that what we have to do is to help the people who are paying the credit and put our arms around the people who are not, because we do not even know who they are. They are ducking and diving, bobbing and weaving. They come up with all sorts of semi-legal and illegal things to live through the day and the week, the month and the year. If there are some unintended consequences then it will be our duty to look at ways of changing legislation and not simply writing off 80% of people to protect the 20%, when the best protection you can give to those 20% is to find out who they are, get very close to them, embrace them and use them. Those are the people who I work with and where I have come from. There is absolutely no way that I would ever come anywhere near to grassing those people up.
I also make the point that the only way in which your credit actually matters is when you go to Argos or Carphone Warehouse and say, “I would like to have a TV”, or whatever it is they are selling, so that you opt in to share your data with them. If you are the poorest of the poorest and you have a bad credit record, you will not be going there so this is an academic argument. The people who will not want to share their credit record are not doing so and not going to Argos; the people who go to Argos are saying, “I’m going to Argos because, thanks to the rent I’ve been paying, I think I stand a very good chance”. Then they say, “I’m going to try and get myself a bigger flat. I’ll try to move from social housing into ownership, and I want desperately the fact to be known that I have been so diligent and useful to my landlord and to myself, by paying the rent”. I would love it if the noble Lord, Lord Blencathra, could withdraw his amendment. Thank you very much.

Lord Blencathra: My Lords, one of the unintended consequences of moving and speaking to such apparently innocuous amendments was to get a passionate speech from the noble Lord, Lord Bird. It is worth being the sacrificial lamb to hear that incredibly powerful speech.
When I was in my 20s, before I was elected, I was an even more precocious brat than I am now and everything was clear-cut and certain. There was right and wrong, and black and white. Then I became elected and  everything became grey. There was no right and wrong anymore; it was all a bit uncertain. When I read the briefing from the CCA I thought, like my noble friend Lord Naseby, that there were some good points in it on some relevant matters, which were worth airing on the Floor of the House. I say to the noble Lord, Lord Kennedy, that I have no idea who the supporters of the CCA are. I did not inquire as I did not think it was relevant. I thought the arguments and worries it had were worth airing, no matter who the backers are.
The only other point I want to pick up is from the noble Baroness, Lady Kramer. I think she was a bit unkind when she said that I gave the game away in saying at the start that the provision would force firms to use and pay for rental data. My motivation was not to flag up concerns about organisations being made to pay but to float some of the worries of unintended consequences. I could retaliate to her by saying that, of course, Experian may make a lot of money out of dealing with the 4 million who have good credit at the moment and are paying their rent on time. The economic argument may cut both ways.
I think that I floated those arguments in less than five minutes and I can be very brief now: I do not think that I have commanded a majority of the House. I can say that to the noble Lord, Lord Davies. Mind you, the Government have not commanded a majority of the House on 14 crucial issues and they were not necessarily wrong either. However, I find the arguments of the noble Lord, Lord Bird, and others who have spoken incredibly persuasive and powerful. We have done our job today. We have given these amendments an airing and heard persuasive arguments against them. I beg leave to withdraw the amendment.
Amendment 1 withdrawn.
Amendments 2 and 3 not moved.
Clause 1 agreed.

Amendment 4

Moved by Lord Blencathra
4: After Clause 1, insert the following new Clause—“Review and termination(1) The FCA must carry out a review of whether rules pursuant to section 1 have been effective in achieving their objectives.(2) The review must be carried out no later than two years after the passing of this Act.(3) As soon as practicable after conducting the review and no later than 6 months after section 1 has been in force for two years, the FCA must—(a) produce a report on the outcome of its review, which must include a recommendation as to whether or not the FCA considers the rules should be extended; and(b) publish the report.(4) Section 1 and rules pursuant to it will cease to have effect unless a resolution to maintain them has been passed by both Houses of Parliament within 6 months of publication of the FCA report.”

Lord Blencathra: My Lords, I can be even briefer in moving and speaking to these amendments. They are fairly self-explanatory, so I do not need to go through them in detail. They would provide for a review of how successful the measures have been and for a sunset clause.
Amendment 4 would ensure that the effectiveness of the rules is assessed after two years of their operation. I think it is important to do that, whether my amendments are accepted or whether the Bill as it stands passes into law. The legislation and the FCA rules would cease to have effect no more than three years after implementation unless, further to the FCA’s report, Parliament approves their continuation. This is a sunset clause, in line with better regulation principles. It is similar to the approach taken in the Domestic Gas and Electricity (Tariff Cap) Bill. If Parliament is to direct an independent regulator such as the FCA to introduce rules on a particular issue, then my noble friend Lord Naseby and I think it reasonable to seek to ensure that if those rules are not having the impact Parliament hoped for, they would cease to have effect.
I see that other noble Lords have tabled amendments which I think do roughly the same thing, unless I have completely misunderstood them. I may have done so and am happy to be corrected. Amendment 4 would insert a simple new clause so that after two years, we would review how well the Bill is working and give Parliament a chance to continue with the rules or not, as the case may be. I beg to move.

Amendment 5 (to Amendment 4)

Moved by Baroness Grender
5: After Clause 1, in subsection (1) leave out from “whether” to end of subsection and insert “its rules, legal instruments, guidance, and policies, including those rules pursuant to section 1, have been effective in improving the creditworthiness of borrowers who rent and who pay council tax.”

Baroness Grender: My Lords, this is a probing of an airing, to give the technical term. The primary aim of this amendment is to counteract the other amendments tabled by the noble Lords, Lord Naseby and Lord Blencathra. Amendment 5 has been tabled to say, “This needs to happen now”. Its primary point is that the FCA needs to conduct a review and do it now.
I am fully aware that the FCA is at the moment conducting a high-cost credit review. However, its most recent conclusion is that it is,
“prepared to look at solutions designed to increase the choice”,
and encourage the,
“availability of alternatives to high-cost credit”—
in other words, more delay. The main point I want to make as a result of this amendment is that tenants cannot wait any longer. The number of tenants is doubling and government policies are not keeping pace. What we need is the immediate implementation of this, not to wait and have a two-year delay. That is the primary reason for this probing amendment. I thank the noble Lord, Lord Kennedy, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Jones, for supporting this amendment. It is an amendment to an amendment, so if the noble Lord, Lord Blencathra, withdraws his amendment, it falls by the wayside.
When I had my Private Member’s Bill banning tenants’ fees, the Government used the unintended consequences argument, asked whether the problem could be solved via the market and then rightly changed their mind, but it is taking a very long time for this to come through. I sometimes wish that the Prime Minister had put a date on this, rather than on one or two other items that have come before noble Lords this week.
I take the opportunity of this amendment to say to the Minister that I think he should support the Bill and give it a fair wind, and that the Government Benches should give a fair wind to more time for it so that it has its Report and Third Reading stages and is sent to the other place. The number of tenants is increasing enormously and legislation is not keeping pace. The FCA needs to conduct an urgent inquiry into the people who were described in the debate on the previous group of amendments, and for that reason I am attempting to amend the amendment.

Lord Bates: My Lords, I think I can be brief on this group. I thank my noble friend for moving the amendment. This group of amendments concerns the proposal for the Financial Conduct Authority to conduct a review into the experience of rental tenants, with particular regard to their ability to demonstrate their creditworthiness under the existing rules.
I remind the Committee that the FCA recently consulted on proposed changes to its rules and guidance on assessing creditworthiness in consumer credit and has undertaken research on this subject, which carefully considered the factors that firms take into account when making lending decisions. This consultation made direct reference to the current limitations on sharing rental data and the potential for new technology to alleviate them. That is the purpose behind the rent recognition challenge.
Furthermore, in April 2018 the FCA announced that it will conduct a market study on credit information. A consumer’s credit information affects how likely they are to be able to access a range of financial services, including mortgages, loans and credit cards. Consumers may experience harm, such as restricted access to credit, if this information, such as rental payment history, is not shared effectively. The FCA’s aim is to ensure the credit information market works as well as possible to maximise the benefits that it can deliver for consumers. The FCA will also collect evidence to gain a better understanding of the potential for harm in this market and, if necessary, identify remedies. This study will be launched in quarter four of 2018. Finally, the FCA conducts a review of all new interventions as a matter of course and continues to monitor the market for consumer detriment on an ongoing basis.
In conclusion, I put it to the Committee that the need for a further review by the Financial Conduct Authority into this issue is unclear, as the regulator is already carrying out extensive work in this field. The Government’s position on the Creditworthiness Assessment Bill therefore remains unchanged.

Lord Bird: I am pleased that the noble Lord has withdrawn—I feel a great victory. We have to move on to the next stage, and I thank the noble Lord, Lord Bates,  for this great opportunity to respond to what we said. I thank the noble Baronesses, Lady Grender and Lady Thornton. It seemed all a bit “spaghetti” just now, so forgive me my trespasses. I will sit down. Thank you very much indeed.

Lord Blencathra: My Lords, this was a simple little amendment asking for a review of the law after a couple of years. I did not understand why the noble Baroness, Lady Grender, needed to amend the amendment. If she did not like what I was seeking to do, she should have just opposed it. I can understand her saying that we cannot have the bit whereby a resolution of Parliament could reject it after a couple of years, but rejecting a review after two years seems a bit unreasonable. I was not seeking to delay the Bill for two years. The amendment merely states—and I happily stand to be corrected—that after the Bill promoted by the noble Lord, Lord Bird, is in force, the FCA should conduct a review after a couple of years. That seems a completely safe and innocuous thing to do. However, I make that point in defence of my amendment. We have been discussing this important Bill and these amendments for just one hour and 10 minutes. That has been a worthwhile way to spend that time. No one on any side has sought to delay the Bill or to wreck it. The noble Lord, Lord McAvoy, will confirm that between 1997 and 2001, if I and my late colleague Eric Forth MP wanted to delay a Bill we could keep going all night, but we are not in that mood and that mode because this is a rather good Bill. I felt the amendments deserved an airing this morning, which they have had.
Amendment 5 (to Amendment 4) withdrawn.
Amendments 6 to 8 (to Amendment 4) not moved.
Amendment 4 withdrawn.
Clause 2 agreed.

  
In the Title
  

Amendment 9 not moved.
Title agreed.
Bill reported without amendment.

Refugees (Family Reunion) Bill [HL]
 - Committee

Clause 1: Family reunion: refugees

Amendment

Moved by Lord Marlesford
Clause 1, page 1, line 4, leave out “one or more” and insert “up to two”

Lord Marlesford: My Lords, I move this amendment for two reasons. First, I believe that legislation and the privilege that we have in introducing Private Member’s Bills should be taken very seriously. By this I mean that legislation is something that requires precision for implementing the intention. From that, it follows that the intention should be reasonably clear and realistic. In this, legislation is crucially different from debate on resolutions, propositions or aspirations. One can, for example, debate the need for a settlement of the Middle East conflict, but to put forward legislation for that is unlikely to be helpful. It is perfectly reasonable to debate all sorts of views on immigration but proposals to uncap it in an unmeasurable way are really not suited to a declaration of policy, let alone legislation.
I remember as a journalist when I had to attend all the party conferences, in 1976 at the Liberal Party conference—the first conference that the noble Lord, Lord Steel, had when he was leader of the Liberal Party—the Young Liberals, who are always inclined to anarchism, had a resolution that there should be completely free immigration into the UK. The noble Lord rebuked them, saying that if they wanted the party to have those sorts of policies they should find another leader. Perhaps the noble Baroness, Lady Hamwee, was a Young Liberal at that time.
The second reason why I am moving the amendment is to probe into the actual figures. Clause 1 specifies nine categories of family members of an individual who have been granted refugee status whose application to enter or remain in the UK the Secretary of State would be obliged to grant unless the refusal was in the interests of national security. Immigration statistics are always complicated, but at its simplest I would point out that the number of people who have been granted asylum over the 10 years up to 2017—and this is the lowest figure—is 56,921. Each, I suggest, would be likely on average to apply for entry for more than one person. In the ninth category of people in Clause 1(2) are included,
“any dependent relative not otherwise listed in this subsection”,
so it is really pretty open wording. No limit is really envisaged.
I believe that any Government are obliged to limit immigration to a number that can be absorbed into the community. My definition of “absorbed” in this context is for the basic state provision of housing, health services generally and education to be able to be provided without diluting, to an extent that is democratically unacceptable, the standard of living of those already resident in the UK. I recognise at once that my own amendment of up to two family members could well amount to over 100,000, and that would probably be over my own measure of “absorbed”. In that context, I remind your Lordships that the latest 12-month figure for net migration into the UK is 244,000.
In practice the Bill would open the door to large numbers of economic migrants. We know that the potential number of those from Africa alone is measured in the millions and it is not really possible to estimate it. All that can be said is that market forces suggest that migration would continue until the standard of living in the receiving country was no longer high  enough to attract economic migrants—thus, the only way of limiting those who want to come is by restricting numbers.
I must mention one other deeply worrying aspect of immigration control in the UK: the capacity of the Home Office to administer it. It is now 12 years since the then Home Secretary, now the noble Lord, Lord Reid of Cardowan, famously declared on 4 May 2006 that the Home Office was “not fit for purpose”. It is sad and deeply worrying that this is clearly still the case, and I am not talking about the deplorable incompetence over the “Empire Windrush”. On that matter, I am wholly on the side of the migrants. In my twenties I was lucky enough, in my first job working for a British chemical company, to be posted for over a year to the Caribbean, living out of a suitcase and travelling from island to island, selling pharmaceuticals to doctors in what was then the British West Indies. I got to know many West Indians and learnt that they have the best sense of humour of any people in the world, and I like and respect them enormously.
I am talking about the fact that it seems that the Home Office immigration service is systemically corrupt. In a Written Answer on 10 January 2012, the Home Office revealed that over the previous five years there had been,
“29 convictions of Home Office staff in connection with their official activities”.—[Official Report, 10/1/12; col. WA36.]
The great majority, nearly all from the immigration department, resulted in prison sentences, two of them for nine years. I fear that that is continuing. As recently as 5 April the Times carried a report of a Home Office official, Mr Shamsu Iqbal, who had been found guilty of falsifying the records of over 400 people, amounting to some £6 million of profit to him and his colleagues. Surely one must ask why the Home Office recruitment and vetting procedure has not been tightened up between the previous figure and today.
At any rate, this Bill is aspirationally attractive, and all of us who have any liberal sensibilities like the idea of families being able to be joined together, although it may well be that better facilities are needed for that purpose. However, the Bill as drafted would make immigration an open season for doubtful and corrupt activities, leaving Ministers little opportunity for questioning what was happening. My amendment would be a small, though probably still too large, step in enabling a practical limit to be imposed. I beg to move.

Baroness Hamwee: It may be for the convenience of the Committee if I speak at this stage. I thank the noble Lord, Lord Marlesford, for the opportunity to return to the Bill, especially because it enables me to give a plaudit to the Government. The Minister would not have expected that.
We have debated the subject of family reunion on previous occasions, but I think the most recent was during the course of the EU withdrawal Bill, when the Minister responding to the noble Lord, Lord Dubs, and resisting his amendment, did not mention the pull factor, which on every other occasion that I can remember the Government have included in their argument. I do not subscribe to the pull factor, described by the noble Lord, Lord Kerr, as implausible. I hope that that was a significant omission.
The noble Lord, Lord Marlesford, is concerned that the Bill is too wide. It is certainly not intended to provide an open season or opportunity for corruption. I had read his amendment as suggesting that he thought there would be disproportionate numbers of family members of refugees—let us remember that we are talking about refugees, not migrants in the wider sense—and that that was why he would limit the number under Clause 1 to two per refugee.
I will comment on the numbers, but will first focus on the Bill’s objective, which I think will itself answer the noble Lord’s concerns. He called for precision, so I shall be precise about the objective. It is to enable families separated by circumstances which have led to refugee status being granted to an individual—in other words, very particular, extreme circumstances—to come together again. Although this may benefit the individual refugee who has reached the UK, that is not the whole picture. We all understand the concept of family and the importance of family life to a young person’s development. We talk about integration, which I think would be very difficult for a child or young person without a family.
There is any number of permutations, but let me get put just three to the Committee. A father reaches the UK as a refugee, leaving a mother and a son aged 17 and an unmarried daughter aged 22. Who of those three should remain in the war zone or a refugee camp, which is not a safe place, or try to make it alone, possibly with the intervention—I was going to say help—of smugglers? All of them are vulnerable.
Teenaged brothers leave their country of origin. They become separated en route and one makes it the UK. Eventually, he establishes that his parents and his baby sister are still alive in his original country. Where does one put the dividing line in that family?
A single boy reaches the UK. His father died in the war from which the boy escaped. His widowed mother is caring for three siblings. One could go on.
I understand that the noble Lord, Lord Marlesford, is seeking to find a happy medium, and that is the way that I would generally approach an issue, but I do not think it works in this context. He mentioned some migration figures and I am aware that he has asked a number of Questions for Written Answer, but I do not think that the numbers in those Answers or what he has said today give directly applicable detail.
I remind the Committee that on Second Reading, the Minister told the House the number of visas issued in family reunion cases outside the rules—because that is possible. They were 21 in 2015, 49 in 2016 and 49 up to September 2017. I understand that when the British Red Cross considered 91 cases involving 219 family members outside the UK, the family range was from one to eight and the average—noble Lords with a mathematical turn of mind will have got there—was about two and a half members per case.
For the Syrian resettlement programme, when the UNHCR submits families to the UK Government, our Government will accept families of up to six members   —above that, they take the matter case by case. In 2014, Care International measured the average family size of Syrians and very vulnerable host families in Jordan and found it to be 5.8.
The noble Lord, Lord Marlesford, mentioned dependants, which is the last category in Clause 1(2): a dependent relative not otherwise listed. Dependants are not an unlimited group of people. The Home Office, the courts and indeed common sense interpret that word realistically, which means fairly narrowly, not in the way suggested.
I would like to think that the Bill will assist large numbers of people, but I doubt that that is the case, which is not to underestimate the importance to each individual affected. I understand that in Germany it was estimated last year that the profile of Syrian refugees was such that between 0.9 and 1.2 family members could ask for reunification. In the Netherlands, in 2016, the estimate was 1.2.
Last year, 794 children—that is those under 18—and 206 aged 18 were granted refugee status in the UK, so we are not talking large numbers at all. Kent County Council—and it should know—says that many unaccompanied children fear attempts to trace their family members in their country of origin because this could put those family members in danger, so they do not do so.
Noble Lords will understand that I am not saying that a limit on the numbers as proposed in the amendment would be okay because it would have no effect—I am not; I am merely trying to paint the picture.
I draw the Committee’s attention to who is family for the purposes of the Bill under Clause 1. It is not open-ended, it is not extensive, it could not be said to be an extended family. There are no cousins, for instance. The list in the clause is that set out in the EU directive on family reunification—to which we are not signatory. We are not talking about economic migrants, as has been suggested, because the sponsor must be a refugee.
The noble Lord, Lord Marlesford, mentioned the capacity of the Home Office. I will leave it to the Minister to respond to that.
I am pleased that the noble Lord accepts the premise of the Bill that families belong together and that our country has a moral duty to recognise them. Accepting the thrust of the Bill and in the light of what I hope he will read as reassurances, I hope that he will accept that the amendment would not be appropriate.

Baroness Lister of Burtersett: My Lords, I oppose the amendment, which has already been ably opposed by the noble Baroness, Lady Hamwee. I apologise that I could not be here on Second Reading, because I strongly support the Bill. The noble Baroness spoke about the importance of family reunion to integration. I was a member of the inquiry set up by the All-Party Parliamentary Group on Refugees into integration, and I shall say a little about what we found, because I think it is relevant as we discuss the amendment.
The evidence that we received from a wide range of organisations underlined the psychological impact. Here I am talking particularly about the psychological impact on minors who are not allowed to bring any family into the country. Then there are refugees who  are here, who have families still in conflict areas or who are still at risk, who are worried sick about what is happening to their families. On the children not allowed to reunite with parents and siblings, Coram Children’s Legal Centre said that it would continue the trauma and suffering of separation and loss. A number of people brought home to us the general impact on integration—that barriers to family reunion create barriers to integration. It is in all our interests that refugees are able fully to integrate into our society. In our findings and recommendations, we argued that,
“successfully being reunited with family members is an important step in helping refugees to integrate”.
We also argued that,
“the definition of family in the Immigration Rules remains very restrictive. Additionally, the lack of family reunion rights for unaccompanied children is a barrier to their successful integration”.
We recommended that they should be allowed to sponsor parents and siblings.
The noble Lord, Lord Marlesford, spoke about statistics and numbers, but we are talking about people. The noble Baroness, Lady Hamwee, rightly said that we were not talking about immigrants—although, of course, migrants are also people. We are talking about refugees, and she gave some very pertinent potential examples. I ask the noble Lord, Lord Marlesford, to think back to when he was an adolescent and put himself in their shoes—a young man who has left his country, for whatever reason, as a refugee. He is here in a strange country, his parents are still in danger, and he has two younger siblings, also in danger. How would he make the choice? Surely, to be asked to make a choice like that as a young person would just increase the psychological suffering. Whoever you chose, you would feel that you had left behind your mother, father, brother or sister, and you would live with the consequences. You would feel guilty about the people you had left behind, rather than those you had been able to bring in. That would increase the psychological trauma and suffering for these young people. We have to try to put ourselves in the shoes of people who are in a really difficult situation. To ask a young person in particular—but anyone, actually—to make that kind of choice about their family as to who they would save or not save is inhumane and cruel.

Earl of Listowel: I speak in support of the Bill and against the amendment. I recognise the concerns that the noble Lord, Lord Marlesford, has raised about pressures on public services, but these children will be in care, so they will need a foster carer or perhaps be in a children’s home. If they have a family member with them, the public purse will benefit in that regard.
From a humane point of view, I worked in a hostel once a week over a period of time and saw a young girl from Afghanistan, and she was always quiet and depressed. She spoke no English—she spoke only a very limited dialect of her language, and the only other speaker was somewhere way off in the East End, so she was very isolated. One evening I arrived and she was in tears, because she had had news that the town that her parents lived in was being shelled, and she was concerned about them. The examples given about the  hardship and emotional trauma for these young people ring very true to me. Simply from a humane point of view, anything that can be done to reunite these children and young people with their parents has to be welcomed, so I support the Bill.

Lord Kerr of Kinlochard: I am a little surprised at the amendment, because I have great respect for the noble Lord, Lord Marlesford, and have enjoyed working on committees with him in the past. I think that his concerns are exaggerated.
The noble Baroness, Lady Hamwee, has covered all the points, and I stress just two. First, the category that we are talking about is very limited—it is self-limited. We are talking about only those granted refugee status or humanitarian protection under the Immigration Rules; in other words, we are not talking about economic migrants or anybody here illegally. We are talking about a very small category, clearly defined in Clause 1(1).
Secondly, the effect of insisting on family break-up would be likely to be serious, and I do not think that it would reflect terribly well on the kind of society that we were, or are. For children who came in 1938, Hungarians in 1956 or Czechs in 1968, we did not impose this kind of family break-up requirement on those here legally as refugees, and I really do not think that we should start.
I share the delight of the noble Baroness, Lady Hamwee, that we heard nothing about the “pull factor” last time we talked about this—and I really hope that we will not hear anything about it today.

Baroness Garden of Frognal: I speak briefly in support of my noble friend’s Bill and against the amendment proposed by the noble Lord, Lord Marlesford. The Bill is about united families and his amendment would see families split in different ways. The Bill really does not open the floodgates to hordes of ravening immigrants. As my noble friend set out, we are talking about small numbers, and this is a small and measured way of helping refugee families in trouble and distress to be together. We have had some excellent briefings from SOS Children’s Villages, which says:
“Children who have been separated from their families are some of the most vulnerable, having lost the people primarily responsible for making decisions on their behalf, guaranteeing their safety and supporting their development to adulthood”.
It is both heartening and heart-rending to read the tales of some of those children, who have battled against the odds with courage and determination and, for the small numbers involved, the measures in this Bill could be transformational.
This is a humanitarian Bill in the best traditions of the society that we should aspire to be, which welcomes those in need, cares for refugees and offers hope and support, particularly for children who have already suffered so much. These are people who can and will contribute to the community; in the past, these are the very people who have contributed not only to the community but indeed to the economy. It is the right and moral way, and I urge the Government to support the Bill unamended as it passes through the House.

Lord Dubs: I am very sorry that, unavoidably, I was unable to be here for Second Reading, and I shall not make a Second Reading speech now. Obviously, I am not happy about the amendment. As for the criticisms made by the noble Lord of the Home Office, I think that the Home Office will have to sort that one out. I am not sure that any of us is really qualified to know very much about the internal workings of the Home Office, except the Minister—so she can deal with that.
The amendment, if passed, could have very sad consequences for a small number of people. I said to a Syrian child refugee, “What about your family?” I speak from memory, but this was roughly the situation. He said that he had a father and sibling somewhere in Turkey and a mother still in Syria. What would happen if we said to him that he should choose between those three? It would be an impossible and agonising decision. We cannot impose that on anybody. It would break the young man’s heart. How could we advise him? We could not—we could only say, “This is a desperately unfortunate situation”. I am sure that the noble Lord, Lord Marlesford, does not mean it to have that consequence, but I suggest that it would. I am not happy about the amendment and hope that the House rejects it.

Baroness Sheehan: My Lords, I rise in support of my noble friend Lady Hamwee and against the amendment by the noble Lord, Lord Marlesford. I have two things to say, the first of which is about pull factors. I hope, as other noble Lords have said, that we will not hear much more about them. I want to add a little bit more evidence and maybe give some succour to the noble Lord, Lord Marlesford, with what I am about to say. The EU’s family reunion directive, passed in 1999, has been signed up to by all member states apart from Britain, Denmark and Ireland. Ireland in fact went ahead and put the measures into primary legislation domestically, and it is now only Britain and Denmark that remain outside that directive. The evidence is that, over the last 10 years, those countries that have signed it have not seen a spike in family reunion applicants. I hope that will put the noble Lord’s concerns to rest a little.
I want to say a bit about the benefits of migration because, too often, we have these debates and we all defend migration, but we should talk a little about what migrants do for us. I will use the word “migrants”, because that was the term used in the speech by the noble Lord, Lord Marlesford. Researchers who study human migration say that countries fear that letting in some refugees will encourage more and that migrants will be an economic burden. Yet the evidence shows that both beliefs are false. Even without a worker shortage, migrants need not be a burden. On 4 September 2015, the World Bank, the UN International Labour Organization and the OECD club of rich countries issued a report concluding that,
“in most countries, migrants pay more in taxes and social contributions than they receive”.
In a study in 2014, researchers at University College London found that both European and non-European immigrants to the UK more than paid their way. Non-Europeans living in the UK since 1995 brought  £35 billion worth of education with them. Those who arrived between 2000 and 2011 were less likely than native British people to be on state benefits, no more likely to live in social housing and contributed a net £5 billion in taxes during that period.
So the question is, why do doors stay shut? The reasons, say the researchers, are not economic, but fear of the cultural impact of foreigners. But all the evidence shows that, with a positive attitude in communities and good leadership, the host community and migrants both benefit. I will just end by saying that there are articles in Psychology Today that show the psychological benefits to the host communities of having a welcoming attitude to migrants. I also cite the example of a small, remote island in Finland, called Nagu, which welcomed refugees. The residents there are very grateful to the refugees for enriching their lives.

Bishop of Chester: My Lords, I am in general agreement with those who have spoken against the amendment by the noble Lord, Lord Marlesford, which is, I think, draconian in the way it is framed. I would like some comment, however, on the scope of Clause 1(2), where nephews and nieces and so on are included. The number that could be involved is really quite large and may make this Bill’s passage more difficult if it is expressed in that large way. The Secretary of State is required to grant an application other than on grounds of national security. I just suggest that the best is sometimes the enemy of the good, and there is just a danger that, with the Bill as framed, you could have 20 or so family members making an application. In the realpolitik of our society, that is just unlikely to get through. On the other hand, I think that the principle of hospitality and welcome needs strongly to be affirmed. The rather narrow amendment here is resisted, but I do have some hesitations about the breadth of the Bill itself.

Lord Kennedy of Southwark: My Lords, I rise to make clear that I do not support the amendment moved by the noble Lord, Lord Marlesford. Though I like and respect the noble Lord very much, I cannot support him in his amendment today. I very much support the contribution from the noble Baroness, Lady Hamwee, who set out very carefully and clearly why the amendment should be resisted, as did all other noble Lords who have spoken, including my noble friends Lady Lister of Burtersett and Lord Dubs.
I would understand the speech by the noble Lord, Lord Marlesford, a bit more if this Bill were saying that any refugee granted status to stay in this country could bring family members to the UK, but it does not say that at all. It says that they may make an application. I am sure that the noble Baroness, Lady Williams of Trafford, will assure the House that when somebody makes an application to the Home Office, there are some very robust procedures in place. It is not a free for all. I am sure that she will tell the House that, as she will be very well aware of what you have to go through to get an application to enter this country. We discuss matters about the House Office almost every week in this House, and sometimes many times a day. We do not normally say that it is a free for all at the  Home Office and that it is far too lenient; we often say quite the contrary about how it operates and can sometimes be very frustrated about the environment at the Home Office, which we think can sometimes be a bit harsh in how it deals with people. I am sure that the Minister will mention more on that.
I also very much agree with the comments of the noble Baroness, Lady Sheehan, who talked about migrants. I am very well aware that the Minister is a migrant herself; she came from Ireland as a child. I am the eldest son of a migrant; my parents also came from Ireland to find work here. I am sure that we would find that many others here are the children or grandchildren of migrants. Migrants have made a very great contribution to our country. They have done wonderful things here and made our country a much better place. I therefore do not support the amendment today, and I hope that the noble Lord will withdraw it in due course.

Baroness Williams of Trafford: My Lords, I start by thanking the noble Baroness, Lady Hamwee, for her continued, insistent interest and support for changes to the family reunion immigration rules and I reassure noble Lords that I have listened, and will continue to listen, to the many thoughtful and very compassionate contributions that we hear in this House every day. I would also like to acknowledge the work of the NGOs whose support of the proposed changes have provided valuable insight and constructive challenge on this issue. It should go without saying, but I will repeat it because it is a crucial point: individuals and communities—which of course includes refugees—who have made their home here over generations have always been and will continue to be welcome. They provide an invaluable contribution to our social, cultural and economic life.
It is worth briefly reflecting on how much this Government have done, particularly in the region, but also here at home, to help refugees from countries such as Syria. We are on track to resettle 20,000 refugees from Syria and a further 3,000 children and families from the wider MENA region. We have also committed £2.46 billion of humanitarian aid to the Syrian conflict. I also want to provide some context. The noble Baronesses, Lady Hamwee and Lady Lister, said that we have had few grants of leave outside of the rules. If I go back to 2016, after listening to concerns about how the provisions for leave outside the rules operated, we introduced changes to clarify our guidance. This now makes clear that the policy will apply to adult dependent sons or daughters aged over 18 living in conflict zones. Around 65 visas for leave outside of the rules have been granted over the last three years. We are working to ensure that this policy works as well as possible in practice. In 2010, the UK resettled around 750 recognised refugees. Last year alone, we provided 6,000 people with protection under our resettlement schemes, around half of whom were children. These are the most vulnerable families, who have been safely and securely resettled and supported in rebuilding their lives. As the noble Baroness, Lady Lister, and other noble Lords said, these are human beings and not numbers.
We have provided nearly 50,000 people with protection status in the UK since 2010, who are entitled to apply for their qualifying family members to join them. We provide all those with refugee status, as well as their family members who join them under our family reunion policy, with housing and full access to benefits and healthcare. Over the past five years we have issued 24,700 family reunion visas. The Government take extremely seriously the principle of family unity for refugees in the UK who have fled persecution and need our protection.
I recognise and commend the Bill’s intention of supporting refugee integration and well-being. However, I ask noble Lords to carefully consider the wider implications of significantly expanding the Government’s framework for refugee family reunion. The Bill as it stands would provide for anyone in the UK currently holding refugee status, as well as those to whom we grant refugee status in the future, to sponsor a much wider range of family members. It would also provide extended rights to sponsor refugee family members for British citizens and other settled persons. The Government have always been clear that we need to focus our finite resources on helping the most vulnerable refugees and their families, including those who are already recognised as refugees in the UK. I am sure that all noble Lords would agree with that principle. But the expansive provisions in the Bill would undoubtedly impact on our ability to do so.
It is extremely difficult to estimate how many people would choose to apply under the expanded rules, and the Bill gives no estimate. However, it would potentially allow tens of thousands of people to be entitled to come here. Despite the well-intentioned points that noble Lords have made this morning, these proposals would lead to the UK’s family reunion policy being open to many more people who may have no protection needs in their own right and are not necessarily in precarious positions, and regardless of whether they were part of their sponsor’s immediate family before they left. This is likely to have significant cost implications for local authorities and public services. Currently, there is no estimate in the Bill of the numbers of people likely to qualify, or of its potential cost in terms of school places, housing, access to the benefits system or the NHS. The NAO has estimated that we will spend £1.1 billion—

Baroness Hussein-Ece: I have been listening carefully. Is the Minister aware that Germany has admitted 1 million Syrian refugees and has just passed legislation very similar to that put before us today by my noble friend Lady Hamwee? Crime there has gone down, unemployment has gone right down and its economy is booming. How does the Minister respond to that?

Baroness Williams of Trafford: I recognise totally what the noble Baroness says and what Germany has done. It has caused problems in Germany, and what the Government of the time decided to do has caused integration challenges. But I recognise exactly what the noble Baroness says. I have not mentioned crime or unemployment today; I was simply talking about  infrastructure such as public services. I was not going there and I would not want to. I know that the noble Baroness is a very compassionate person indeed.
I have lost my place. I was talking about the extended family reunion rights for British citizens. I will now move on to another point, which I have also lost. I am very glad that the noble Lord is about to intervene.

Lord Kennedy of Southwark: The Minister said a moment ago that the Bill would allow many thousands of people to come to the country, but all it does is to allow them to make an application. There is quite a distinction between those two things. Perhaps she could confirm that.

Baroness Williams of Trafford: The noble Lord is absolutely right, and I also said that it is difficult to estimate. Of course people could make applications, but they would be doing so under the legislation we have passed. However, I made the point that it is quite difficult to get exact numbers.
I recognise the potential implications of the Bill highlighted by the amendment tabled by my noble friend Lord Marlesford, which would seek to limit the number of family members that could be granted leave under the Bill to a maximum of two. It is a recognition of the wider impacts the Bill may have. As I think every noble Lord mentioned, it could have a divisive effect on families and on the people in the position of having to make those awful decisions. While the current provisions are more narrowly defined in terms of family members who may qualify, this is not limited to a specific number of individuals. I think that is why noble Lords probably took issue with my noble friend’s amendment. This clearly demonstrates the complexities around this issue and why it requires careful consideration, which is what the Government are doing.
My noble friend Lord Marlesford talked about the Home Office being corrupt, which is quite a strong allegation. He then moved on to the capacity of the Home Office—what has the Home Office done to improve vetting and recruitment procedures? The noble Lord, Lord Kennedy, helpfully pointed out that for anyone to get through the Home Office procedures involves a very rigorous process, which is why I am at this Dispatch Box so much, now almost every day of the week, including Friday. As regards vetting in the Home Office, it follows the Cabinet Office vetting process, which is standard across Whitehall. All Home Office staff are bound to adhere to the Civil Service Code, and the Home Office is determined to uphold the highest standards for our staff.
We have all seen the tragic consequences for people, and particularly the terrible sight of unaccompanied children who take dangerous journeys, most likely in the hands of traffickers. While I fully commend its intention, the Bill is likely to place in danger an increased number of those people it seeks to protect. I have not mentioned the P word, because I do not want to dismay the noble Baroness or the noble Lord, but I hope that the noble Baroness will recognise the point I am making. Rather than refugees seeking protection in the first safe country they reach, the Bill creates a perverse incentive for them to make perilous journeys to the UK in the hope of subsequently bringing their  family here. We must ensure that we do not put more children in harm’s way, and we are doing this already through resettlement of children and their families direct from the region. We know that policy changes can and do have an impact—

Lord Kerr of Kinlochard: The Minister got just too close to mentioning the unmentionable. Is it really plausible that, say in Idlib, if it is under siege in six weeks’ time, the family sits around the dining table, pick a child and tell it that it must set off across the battle lines and the Mediterranean, to try to get into England so that it can then pull the family into England? That is implausible. We are talking about refugee reunion and about children. We really must stop talking about this wildly implausible pull factor. They come here to escape being killed; they do not come here in order to become a magnet for the rest of the family.

Baroness Williams of Trafford: I do not dispute a word of what the noble Lord says—that people’s intention in coming here is to flee the terrible things happening in their countries. I am saying that we have all seen the horrible pictures of children who have made these journeys and have either died or got themselves into terrible danger on the way. We talk about this often.

Baroness Sheehan: Is the Minister aware that the independent inquiry of the Human Trafficking Foundation in July last year found exactly the reverse of what she said? It found that the fewer safe and legal routes there are to process asylum seekers and refugees, the more power the smugglers have.

Baroness Williams of Trafford: I am slightly confused by what the noble Baroness is saying. I do not think that anyone would dispute that a child sent across the Mediterranean is very vulnerable to traffickers. I will give an example of what I mean by that. Immediately following the recent UK-France Sandhurst summit and the press reports suggesting a further transfer of minors to the UK, the number of children arriving in Calais more than doubled, from 59 to 137. There is no disputing that children who travel alone like that are in danger from all sorts of unintended consequences of our wanting to give them support and refuge. Although civil war or persecution is the absolute deciding factor in whether an individual flees their country, as the noble Lord, Lord Kerr, said, it does not explain the decisions made in undertaking dangerous secondary movements.
This Government have invested significantly in supporting the most vulnerable refugees through our resettlement programmes. These are safe and legal routes to protection and are designed to keep families together without the need for migrants to embark on dangerous journeys or to put their children in the hands of criminals who exploit them. We should not create potentially perverse incentives outside of those schemes, as this Bill proposes.
Nor must we lose sight of how the family reunion policy fits within wider asylum and resettlement work. I am glad to see the noble Lord, Lord Dubs, in his place, because that includes implementing Section 67 of the  Immigration Act 2016. The Government have committed to the transfer of 480 unaccompanied children from Europe to the UK under Section 67. Over 220 children are already here and transfers are ongoing. This is in addition to current commitments under the Dublin regulation. Work continues with member states and relevant partners to ensure that children with qualifying family in the UK can be transferred quickly and safely to have their asylum claim determined in the UK.
There has been much debate about what will happen after we leave the EU if the family reunification provisions under the Dublin regulation are no longer available. Retaining the family reunification provisions of the Dublin regulation post EU exit was the subject of the recent amendment to the European Union (Withdrawal) Bill tabled by the noble Lord, Lord Dubs. I state again that the Dublin regulation does not confer immigration status; it is a mechanism for deciding the member state responsible for considering an asylum claim. Anyone transferred under the Dublin regulation will be expected to leave the UK if they are found not to need protection. The family reunion rules will continue to enable immediate family members to reunite safely with their loved ones in the UK, regardless of the country in which those family members are based.
Finally, the Bill makes provision for legal aid to be reinstated for family reunion cases. The Government are currently undertaking a comprehensive review of legal aid reforms, including an assessment of the changes to the scope of legal aid for immigration cases. The review will report later this year. It is important that we do not introduce legislation that pre-empts the outcome of that review, which needs to run its course.
I will just pick up on some other points on which I have had pieces of paper passed to me. One noble Lord mentioned the EU comparisons. We understand that on 1 August this year Germany will introduce a new migrant family reunification law for those with subsidiary protection. It will provide rights to family reunion where there were no rights before. The media have reported that some 26,000 inquiries about this new law have already been received by the German Government. I have probably made that point slightly out of step with where I should have said it in my speech.
I conclude by reassuring noble Lords that we will continue to listen to concerns about family reunion. I particularly thank the noble Lord, Lord Dubs, and the noble Baroness, Lady Hamwee, whose efforts in this area are consistent and determined and come from absolutely the right place. However, our starting point is that family reunion is a matter for the Immigration Rules, as the noble Lord, Lord Kerr, pointed out, and for policy rather than primary legislation. I look forward to carrying on working with the noble Lord and the noble Baroness, together with all other noble Lords, on this very important and sensitive issue.

Baroness Hamwee: Before the noble Lord responds, this is not the moment to continue the debate, although I could take issue with a number of the Minister’s comments. However, criticism has been made of the fact that there is no estimate of numbers or costs in  the Bill. I accept that there is no impact assessment, and it would be difficult for someone like me to undertake one, but if that is an offer from the Minister for me to go into the Home Office and spend time with officials to work on the detail, I would be absolutely delighted to do so.

Earl of Listowel: My Lords, again before the noble Lord responds, is it not right to pay tribute to the caseworkers? This debate has highlighted the immense challenges they face in making their judgments. Does the Minister not agree that it is right for us to pay great tribute to their work? Can she assure the Committee that, when she looks at capacity in the Home Office, she will ensure that those caseworkers get all the emotional support and time they need to reflect on their work so that it does not overburden them, perhaps contributing to the poor outcomes from casework that we occasionally see?

Baroness Williams of Trafford: My Lords, the Home Office often comes in for negative comments, so it is always nice to hear noble Lords pay tribute to the dedicated staff who work tirelessly for the right reasons and for the right outcomes for the people who apply. I look forward to the analysis of the noble Baroness, Lady Hamwee.

Lord Marlesford: My Lords, I thank all noble Lords who have taken part in the debate. I think we all agree that underlying the Bill are the humane intentions which we all support. Every example given was fully valid and I support them all. However, the fact remains that the Bill removes from the Home Office the powers and opportunities to control the total number of people who come into the country. I have indicated that I have a pretty low opinion of the Home Office’s capacity in this respect, but the right reverend Prelate put his finger on this point, which I mentioned in my speech: the only ground on which an application can be stopped by the Secretary of State is that of national security.
As the noble Lord, Lord Kerr, said, applications are available, but if there is no government check—the Bill explicitly and deliberately removes the government check—and if the Government do not have the ability to make the final decision, which of course is subject to every sort of lobbying and debate and all the rest of it, you are abrogating the overall control of immigration which I believe the people of this country would always insist upon. That is the fundamental error of the Bill.
My amendment was merely intended to draw attention to this and to reduce the possible number. I have said already that I thought 100,000 would probably be too many to be allowed in, but the Government must take on more clearly a policy on how many people and in what circumstances because I am by no means sure. The Government have always said that they want the brightest and the best, and that must be right for the country. None the less, there are strong humanitarian arguments for individual refugees to be able to be reunited in this country with their families. But it is about the way in which that is done and the avoidance of it being sidetracked by those with less creditable motives. It is important that we safeguard against that, and the only people who can do so are the Government and the Home Secretary.
There is a deep flaw in the Bill, but, equally, it has been worth while, and I hope that this has been a worthwhile debate. I beg leave to withdraw my amendment.
Amendment 1 withdrawn.
Clause 1 agreed.
Clauses 2 to 5 agreed.
House resumed.
Bill reported without amendment.

Divorce (Financial Provision) Bill [HL]
 - Second Reading

Moved by Baroness Deech
That the Bill be now read a second time.

Baroness Deech: My Lords, this Bill would replace the current system for splitting money on divorce, a system that is past its sell-by date, with a tried and tested system modelled on that used in Scotland and in most of Europe and North America.
In the world beyond this Chamber, family law and its shortcomings are daily fare. I am a devotee of “The Archers” and regard its storylines as good indicators of common concerns. For those of your Lordships who do not listen, I should explain that the following issues are ongoing: a no-fault divorce between Alistair and Shula; surrogacy for Ian and Adam; residence rights for Will; marriage versus cohabitation for Fallon and Harrison; and a prenup for Justin and Lilian. It is all over the television. The Times has taken up the causes: no-fault, money, prenups and cohabitation.
The outgoing President of the Family Division, Sir James Munby, has allowed me to say that he favours reform. The noble and learned Lord, Lord Mackay, the noble Baroness, Lady O’Cathain, and the noble Lord, Lord Grade, do too, although they are unable to be here.
Several judges of the Supreme Court are family law specialists and their decisions regularly, but sadly, make headlines. I say “sadly” because some obvious outcomes, such as one spouse not having a lifelong claim to a fixed share of the earnings of the other ex-spouse, are costing hundreds of thousands of pounds to determine. Other factual situations present themselves, such as no-fault divorce and how many times a former spouse can come back for more, which one would have thought were resolved but which were not, and the outcome is anyone’s guess. But the Government are doing nothing and, for decades, have not taken up pressing issues in family law apart from procedural ones. That is shameful, not just because the lives of ordinary couples and their children are laid waste by the costs and the bitterness and uncertainty of the law but because it has gone so far as to offend against the principles of the rule of law, as expounded by the late Lord Bingham.
In my speeches on this Bill, most recently just over a year ago, I have set out the relevant uncertainty, unpredictability and inaccessibility of the law, largely judge-made, despite the existence of a statute of 40 years ago intended to clarify matters. But the rule of law requires that the law be accessible, intelligible, clear  and predictable. Issues should be resolved by application of the law and not by discretion. Means must be provided for resolving disputes without prohibitive cost or undue delay. The procedures should be fair. The current law, based on Section 25 of the Matrimonial Causes Act and as embroidered by judges for over 40 years, fails all those tests.
It is nothing to be proud of that the wives of wealthy men come to London from all over the world for a generous settlement, giving the city the title of “divorce capital of the world”. It is nothing to be proud of that, in many cases, the legal costs of resolving the finances eat up half or more of the entire assets available to a couple, depriving their children of what should be their future stability. In a recent case about a £30,000 annual award to a child, £295,000 of costs were accrued. I note also the case where the husband was awarded £50,000 but was left with a bill of £490,000 in costs, and the case where the costs swallowed up the entire assets.
It is nothing to be proud of that judge-made principles, as they strive to keep up with their view of societal changes, swerve from compensation to need to fair sharing, so that proper advice and predictability fly out of the window, as the noble Baroness, Lady Shackleton, will tell you. As lawyers grope for guidance, statements in judgments are parsed as if they were statutory provisions, with surprising outcomes. It is nothing to be proud of that financial issues may take years to resolve after the divorce is finalised and that an ex-spouse can return to court for a fresh award decades after the divorce.
It is nothing to be proud of that children are not only deprived by this state of affairs but that basic child maintenance is not well enforced and that the statutes that might give children more protection are not fully explored. My Bill would apply to all marriages and civil partnerships. It does not seek to change the law on child support, which remains vital and underenforced. I wish that the lawyers who campaign for no-fault divorce would campaign as strenuously for child support. My Bill would strengthen the position of children by requiring consideration of children’s housing to the age of 21, bearing in mind the increased rates of higher education and staying at home. It would make prenuptial and post-nuptial agreements binding as long as the parties had independent legal advice.
We hear much now about the desirability of no-fault divorce. That idea—a quick divorce without attribution of blame—places squarely on the table two irreconcilable notions. What is the point of fault-free divorce if the couple then spend years fighting over their money, with much more bitterness, expense, waste and loss to their children than ever was caused by the actual divorce petition? If it is sensible to recognise that a marriage may break down without fault, what rationale can there be for expecting one of the former spouses to continue to maintain the other for years and to give him or her half their pension and sometimes the home? The only rationale is, quite rightly, protection of the children.
As the Law Commission said in its 2012 report on this issue:
“The situation facing family judges has therefore been likened to that of … a bus driver who is given a large number of  instructions about how to drive the bus, and the authority to do various actions such as turning left or right. There is also the occasional advice or correction offered by three senior drivers. The one piece of information which he or she is not given is where to take the bus. All he or she is told is that the driver is required to drive to a reasonable destination”.
The Law Commission recommended that prenuptial agreements should be binding and that the old bias against them was ended in the Supreme Court decision in Granatino. However, so many conditions are attached to their binding nature by the Supreme Court that couples now spend a fortune on litigating over whether or not the prenuptial agreement is in fact binding. A recent example is the case of BN v MA, where the prenup was upheld but the costs of doing so were £400,000, and another where it was largely overridden so that the husband was awarded £1.7 million for a house but the legal costs were also £1.7 million.
My Bill would put prenups on a statutory footing, with few conditions except those that normally apply to avoid fraud and duress in contracts. It may not quickly become the custom in this country for engaged couples to enter into such a contract, although it is de rigueur in most of continental Europe. For older couples who would like to enter a second marriage but are fearful that if the second marriage went wrong the children of the first marriage would lose out to the second husband, the ability to sign a prenup would allow them to marry with reassurance that the children would be protected and would not lose out.
Countries which allow prenups do not have higher divorce rates than we do, an argument put forward by those opposed to them. It seems to make little difference. Giving them statutory force would have the advantages of improved predictability of outcomes, meeting public expectations that they can make their own arrangements and maybe encouraging marriage for those who, with past bad divorce experience, may be reluctant to commit again to a potentially financially ruinous legal situation.
The main provision of my Bill is that it would introduce the well-known system elsewhere in the world of a fair starting point as the equal division of all the property and pensions acquired by the couple after marriage. It would exclude premarital assets, inheritances and gifts. There is flexibility in the Bill to allow the house to be retained for the accommodation of, for example, a mother and children, and to disentangle the situation where premarital assets are used to buy and improve marital property.
The noble and learned Lord, Lord Hope, criticised the Scottish law in the case of Miller as lacking inflexibility, but the recent report on the Scottish law by the University of Glasgow has reassured him that there is enough flexibility but still enough certainty. Provision is made in my Bill for maintenance of up to five years unless there is exceptional hardship, following Scotland and most of the rest of the world. Property, pensions and lump sums may provide more efficiently for the support of a woman who cannot or will not work.
This brings us to the nub of the changes in society which this Bill is trying to address. The law for centuries has seen all women as dependants, certainly once they marry, tied to their husband’s financial situation and  social status for ever, regardless of the nature of the breakdown or her own capacity. In brief—noble Lords know the social changes all too well—72% of mothers go to work, according to the Institute of Fiscal Studies, whereas in 1975 only half did. Women’s education and career prospects, equal opportunities and pay law have driven this, and two-earning couples have become the norm.
However, to the law, this is unknown. There is a thesis to be written about the absence of the modern working woman from family law. Women with no children and with grown-up children are still treated as incapable by many of our judges, although the recent judgments of younger judges show a growing realisation of the change. Those younger judges need encouragement to stick to their guns with a change in the law.
There are those who will say that women suffer in the workplace and from childcare, and that men should continue to make it up to them for the rest of their lives. As long as judges accept as reasonable the demands of some women on divorce for millions and of many more for ongoing lifetime payments, then subconsciously or consciously male employers will never take women as seriously in the workplace as they should. The majority of women who work feel downgraded and belittled by the alleged helplessness and unreasonable demands made by some. Extreme handouts to divorced wives do nothing to help unmarried women and single mothers who are making their own way in the workplace. Women are not all victims, they are autonomous, and sometimes they have to make over property to less well-off husbands on divorce regardless of behaviour. Of course the law is equal, but the attitude of judges is not.
This brings me to the objections to any reform at all by the family law Bar and the objections to some reforms by solicitors. It is similar to the lawyers’ opposition to the Civil Liability Bill. As Mandy Rice-Davies so famously said, “They would, wouldn’t they?” Or, as an experienced judge put it to me, the Bar is blinded by its own self-interest. It is wedded to the system, as are some judges, because it believes that it is doing a good job. It is, within existing parameters, but at a terrible cost, for hundreds of thousands of pounds—which divorcing couples need—are spent on legal costs. The Bar objects to any changes because most couples reach an agreement without going to court, at great cost and because the expense of seeking what they see as fair is prohibitive. In the local family court, I have seen those poor couples who have no legal aid and representation on only one side. “That’s £50,000 costs chalked up already,” says the genuinely helpful judge, “and if you cannot reach accord today, in the little room at the end of the corridor, it’ll be another £25,000 if you go to another judge for further determination”. They settle because of the unpredictability of the next judge, as the noble Baroness, Lady Shackleton, will tell you.
Another report on the Scottish system, which forms the basis of my Bill, points to a far higher rate of negotiated outcome there because of clear guidelines. The family law Bar points to the guidance for such couples, issued by the Family Justice Council. I have read all 72 pages of it. It would make a great graduate  thesis on the law but I have never seen it cited in a judgment and it is far too complicated for a couple to use, setting out, as it does, all the twists and turns the law has taken recently. The Bar ignores the empirical evidence of the more successful and less degrading operation of the law in other countries and the fact that no action has been taken on the substance of the Law Commission proposals. What the Bar sees as fair is a far cry from what ordinary litigants see as fair and the Bar makes the assumption that I have already criticised of women as victims.
The Bill offers an off-the-peg solution. It will end the attitude of some judges that, since we all look better in Savile Row suits, there must be no Marks & Spencer ready-made. The Scottish law, very like European law—with which alignment is arguably more desirable than ever—has been reviewed after 30 years of operation. The Family Law (Scotland) Act 1985 was based on the work of the Scottish law commissioner, Eric Clive; Scotland has no-fault divorce and cohabitation law. The recent report, Built to Last, gives Scottish law a glowing review; in particular, it spells out how much better it is than English law—a view widely shared except by the lawyers at the English Bar. I give you just two comments from the report. First, the law in Scotland,
“has been successful in achieving one of its aims which was to encourage parties to reach their own agreements about the financial and property consequences of divorce”.
Secondly:
“English law is broken and needs mending: but ours doesn’t … generally speaking, it’s a gem”.
I am offering that gem, which will reduce trauma for children and the need to go to court, lower costs, put less stress on couples and enable a fairer outcome, recognising partnership in marriage. For the first time, it would recognise equality of spouses, rather than subjecting their claims to the view taken of them by the judge. The wife would no longer be a supplicant but a partner ending a partnership on an equal footing. Above all, it would be the result of democratic debate here for the first time in decades, and take account of public opinion—I cannot tell you how many sad letters I get about this—and the changing nature of marriage.
It is a disgraceful state of affairs when the Government —this one and previous ones—neglect family law, which affects hundreds of thousands of people and their children every year. I know that the Bill as drafted is not as satisfactory as it should be, being a Private Member’s Bill—I must thank the noble and learned Lord, Lord Walker, for helping me so much—but its principles are clear. It has support from around the House. I say this to the Government: do something. Take this over. It is a vote winner and it is the right thing to do. I beg to move.

Lord Walker of Gestingthorpe: My Lords, I speak in support of the Bill. I will be reasonably brief because it has been described so thoroughly by the noble Baroness, Lady Deech. She has shown great determination and perseverance with it. In fact, it is virtually identical to a Bill that passed through all its stages in this House in the last Parliament but, sadly, did not have time to make any progress in the other place.
It is a remarkable fact that in these days of constant change—in economics, social life and fiscal and other fields—the law on financial provision on divorce is still regulated, in substance, by Section 25 of the Matrimonial Causes Act 1973, a statute passed more than a generation ago. Section 25(1) gives priority to the claims of minor children of the family; no one seeks to alter that primary need in any way. The trouble is that Section 25(2) contains the other main guidance from Parliament, given in eight paragraphs with no sort of hierarchy or pecking order between them. They are eight remarkably dissimilar paragraphs. Some are totally unsurprising, for instance paragraph (d), concerning,
“the age of each party to the marriage and the duration of the marriage”.
Others are more debatable, for instance paragraph (g), which is concerned with,
“the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it”.
Some are simply the starting point of what may be an almost endless debate, notably paragraph (f), concerning,
“the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family”.
It is hard to imagine a wider or a more important judicial discretion. Some judges and practitioners—not all, but some—take the view that it all works perfectly well in practice. With respect, it simply does not. The Law Commission reports fieldwork studies showing wide variations in practice between different judges, groups of courts and regions of the country. General guidance may be given from time to time by the Supreme Court, but only the biggest of “big money” cases get to that court and they are by no means typical.
Big money cases often incur very high legal costs, but even much more modest litigation about financial provision on divorce, as the noble Baroness mentioned, can be a heavy burden on ordinary families at a time when they are likely to have all sorts of extra costs to face. Legal aid is no longer available except for issues involving minor children or in cases of domestic violence. But at present the uncertainty of the outcome drives many parties to litigation. Divorce is often traumatic enough without the whole family’s resources being depleted by legal costs of the scale that has been mentioned.
I referred earlier to the Law Commission’s conclusions about whether the present law is predictable. I should add that the Law Commission has strongly recommended that there should be a change in the law regarding what lawyers call prenups. The Bill contains provisions to that effect. I should say a word more about so-called prenups as I was a member of the Supreme Court, which heard the important case of Radmacher v Granatino about seven years ago. To go into the issue of prenups, as so often, involves a bit of history. Before 1857, divorce was totally different. It was dealt with entirely by the ecclesiastical courts. It was not really divorce at all; it was divorce in the Latin phrase, a mensa et thoro—from the board and the hearth. It was much more like judicial separation. In those days, when marriage was indeed regarded as indissoluble, it was not wholly unreasonable that a doctrine arose that  it was contrary to the public interest for parties contemplating marriage to enter into an arrangement as to what would happen if, finally, sadly, they separated. It was regarded as a bad thing that they should be thinking about that at all at that stage.
Now that we have had true divorce since 1857—some 160 years—it is less and less sensible to regard it is somehow contrary to the public interest that parties contemplating marriage should consider the prospect, however remote they hope it is, that something might go wrong. But it was not until the important case of Radmacher v Granatino that the Supreme Court decided that the notion that it was contrary to the public interest should disappear. Even so, it simply meant that the court could take account of the provisions of a prenuptial agreement and were not in any way bound by them.
Radmacher v Granatino was a quite remarkable case because Mrs Radmacher was a German national from a very rich German family and almost certainly still had a German domicile although she was living in London, and Mr Granatino was a French national and probably still had a French domicile. It was therefore odd. The noble Baroness referred in another context to London becoming the divorce capital of the world. Mrs Radmacher was advised that if she went back to live in Germany for quite a short qualified period of I think about six months, her divorce would have gone through on the strength of a very strong binding prenuptial agreement that she entered into with her husband in Germany. Surprisingly, she decided to continue the proceedings in this country and must have spent millions of pounds before her eventual victory in the Supreme Court, and then only on the basis that it was possible for the court to take account of the prenuptial agreement rather than being in any way bound by it. That would be dealt with by the Bill.
It is regrettable that the English Law Commission felt unable to recommend other changes to the law because of continuing lack of consensus across the country as to what they should be. On a subject of such general importance, it is understandable that the Law Commission should want to act only on a clear consensus. But change is long overdue.
Many of the Bill’s provisions reflect those which have now been in force in Scotland since 1986, the 1985 Act having come into force straightaway the next year, with minor changes in 2006 to reflect changes to the permitted grounds for divorce in Scotland. A key feature is that only “matrimonial property”, as specially defined in the Bill, is available for division between the parties. The Scottish Law Commission, unlike its English counterpart, has at all stages strongly supported the new Bill in Scotland. The general view appears to be that the provisions in Scotland are working well in practice. That was the main conclusion of a thorough survey conducted in 2015 by a team at the University of Glasgow led by Professor Jane Mair.
The House will want to look closely at the definition of “matrimonial property” and other key features of the Bill, but at this Second Reading stage, I invite your Lordships to say simply that, after 45 years, the time has come not only to sanction prenups but to make  radical changes to the very wide and unfocused judicial discretion that is, sadly, a feature of Section 25(2) of the Matrimonial Causes Act 1973.

Baroness Shackleton of Belgravia: My Lords, I thank the noble Baroness, Lady Deech, for the time and energy that she has devoted to bringing this Bill before your Lordships’ House. As a practising divorce lawyer for nearly four decades, I want to register my total support for this legislation, which is long overdue, and I beseech the Government to do something about the existing sorry state of affairs. Practising in this field, I see people entering this area of litigation become victims of a statute that is no longer fit for purpose and which leaves too much discretion in the hands of the judges who apply it.
I have recently been reading a little book by George Mikes called Wisdom for Others. I alighted on a vignette about divorce. It was written in 1950, but could be equally applicable today. I quote from it:
“Once when I was about 12 I read a story in a boy’s paper about a big dance to which people were invited by huge posters with the announcement, ‘No Entrance Fee’. Many went, danced and enjoyed themselves then, on leaving, they were stopped at the door and requested to pay. ‘What do you mean? We were told there was no entrance fee’. ‘That’s quite true’, was the answer, ‘there was no entrance fee, but there is an exit fee’. I considered that story at the time silly. Silly indeed it was, but impossible? Look at the marriage laws of modern civilised countries, especially in the Anglo Saxon ones. There is no entrance fee but there is a terrific exit fee—financially as well as emotionally”.
To develop this line of thought, say it was worse than simply finding out that no entrance fee did not necessarily mean no exit fee, and that you knew that, in all likelihood, you would be charged, but what? Imagine if the level of the exit fee depended on the discretion of the person employed on the gate to levy it—let us call him the bouncer. On some nights leavers could be favourably treated, with perhaps a reduction for those over a certain age, or for couples who danced beautifully. On other nights, leavers could face far harsher treatment: perhaps a surcharge for failing to consume any refreshments. Such random increases or reductions in the exit levy are dependent on the identity and discretion of the bouncer, and nobody knows who the bouncer is until they get to the exit. Without meaning to sound at all disrespectful, substituting the bouncer on the gate for the judge in the divorce court brings us close to the sorry state of the operation of the law in the field in which I have practiced for so long.
As we have heard from the noble and learned Lord, Lord Walker, Section 25(2) of the Matrimonial Causes Act 1973, enacted some 45 years ago, gives the court almost total discretion in deciding the level and nature of financial awards on divorce. Judges can follow the letter of the statute but exercise their discretion in myriad different ways. It is not uncommon in High Court financial dispute resolution hearings, where a judge gives an early, neutral evaluation of the outcome of the case in the hope of encouraging settlement, for the parties to be told that there are mean judges and generous judges. That being so, and with parties perhaps not knowing until the day before the final hearing which judge is allocated to their case, it makes a great deal of sense to settle their case now, to get a result within their control.
I have done financial dispute resolutions where the recommended settlement bracket is wildly different from the trial judge’s ruling on identical facts. For example, the judges recommend that parties settle at 50%, only for the judge at the full trial a few months later to award the applicant 40%, or vice versa. Or the FDR judge says that a prenuptial contract is of no significance whatever, only for the trial judge and the Court of Appeal to find that it has magnetic importance. This disparity of judicial discretion, enshrined in an out-of-date statute, cannot be right or fair for the, sadly, very many couples engaged in matrimonial litigation.
The Bill of the noble Baroness, Lady Deech, seeks the production of a statutory framework to ensure a far more a reliable prediction of outcome. This would enable parties to reach an agreement soonest, as their lawyers could advise with confidence on the likely outcome, and the parties would be less likely to “roll the dice”. It would enable FDR judges or mediators to predict the outcome of a case with almost certainty, irrespective of the identity of the judge at the final hearing, and judges would have the comfort of operating within defined, determined and clear statutory parameters to produce more uniform judgments.
Having heard Professor Jane Mair speak about the Scottish system on which this Bill is based, I was overwhelmingly persuaded of that system’s infinite superiority. The appeal of predictability of outcome is obvious. The most difficult situation for most people to cope with in life is uncertainty. It may be true that many cases settle before a full trial, but the statistics do not mention the very significant financial and emotional costs involved in getting to the FDR. Because the ambit of judicial discretion is so wide, technicians practise the dark arts of minimising or maximising financial claims—depending on which side they are paid to argue for—as until the identity of the tribunal is known, it is not possible to know which arguments are likely to meet with favour. Sometimes the reasons for settling are akin to the television programme “Take Your Pick!”, where a contestant is asked whether they would prefer to take the money or open the box, the money being certain but the box—as in proceeding to a trial—being uncertain.
I recognise that I now specialise predominantly in high net worth cases, although I have in the past worked in a law centre and I take on non-high net worth, pro bono work. Where the asset base is lower and the legal cost often unaffordable or disproportionate, uncertainty of outcome is even more damaging. For example, it is not currently possible to predict whether an applicant—wife or husband—is entitled to maintenance payments for life or for a fixed period of time. This is quite a significant discrepancy, with huge financial consequences. Much depends on the postcode lottery. Anecdotally, the northern courts seem to prefer the applicant to get back on their feet and become financially independent. The southern courts seem more indulgent. Uncertainty of outcome leads to delay in settling cases. Delay in getting a court hearing not only has financial implications—money being wasted on costs unnecessarily—but a huge emotional effect in what is already a traumatic time for families. Financial proceedings cause bitterness and rancour and often   aggravate the ability of parents to co-parent effectively. Children are damaged and become the unwitting victims of uncertainty and delay in resolution.
There is a further reason why I support the Bill. The appeal process has recently been changed. A request for permission to appeal from a High Court judge to the Court of Appeal is now to be considered by a single justice, often from the Family Division. If the single justice does not give leave, there is no right for an oral hearing to argue against the single family judge’s decision. This is the Family Division marking its own homework. Potential appeals will be blocked—appeals often being the lifeblood of change and clarification. Historically, when brakes have been imposed on the exercise of extensive lower court judicial discretion and “impermissible gloss” on the interpretation of the statute reined in, more often than not that is not driven by the family judges but predominantly by the non-family judges. It is often the latter who correct what they perceive as a misrepresentation of the law as applied by the lower courts, and create new law.
In the then House of Lords judgment in the ground-breaking case of White, the overriding application of the “reasonable needs” concept, liberally applied and developed over many years, was summarily replaced by the principle of sharing and a seismic change in the way that finances were divided on divorce. In 2010 in Granatino v Radmacher, to which the noble and learned Lord, Lord Walker, has already referred—I represented Mr Granatino in that action—the Supreme Court held that in certain circumstances prenuptial agreements could be effectively binding, but to illustrate what I am saying the dissenting judge was the only family judge sitting on the panel which voted in favour of the application of the prenup by a majority of eight to one.
The Supreme Court and the Law Commission have favoured changing the current law in respect of prenuptial contracts but nothing has yet been done. Even if the law on prenuptial agreements were changed so as to make them binding so long as they were “fair”, it is the bouncers, with their ultimate discretion, who would then determine what is fair. To quote the Supreme Court:
“Then fairness, like beauty, lies in the eye of the beholder”.
I conclude as I began, with gratitude to the noble Baroness, Lady Deech, for introducing this Bill, which is long overdue and which I implore the Government to move forward on.

Lord Brown of Eaton-under-Heywood: My Lords, I should perhaps begin by saying that I know a good deal less about this subject and its operation in practice than the noble Baronesses, Lady Deech and Lady Shackleton, matrimonial law never having been my special subject, either at the Bar or on the Bench.
Inevitably, however, I was involved in a number of cases that reached the courts including that most seminal of early pre-nuptial settlement cases, referred to several times already, that of Granatino v Radmacher —the title can be the other way round, depending on where you see the case reported. This was a case on which nine of us sat in the Supreme Court and all  but one, the noble and learned Baroness, Lady Hale of Richmond, who is now of course the President of that court, gave substantially greater effect to such an agreement than the noble and learned Baroness would have given, although, as the noble Baroness, Lady Deech, has explained, we hedged it about with more qualifications than were no doubt necessary or ideal. That decision was, as the noble Baroness, Lady Shackleton, has made plain, contrary to the interests of her client, for which I suspect she has never yet forgiven us although I was glad to see that, as I understand it, she now supports Clause 3. My noble and learned friend Lord Walker of Gestingthorpe was also on the case, as he has said, and I take this opportunity to acknowledge his great skills as a legal analyst and draftsman although, like me, he was never a matrimonial specialist.
Tinker as one may wish to do with some of the details of this Bill, its essential structure is, I suggest, a model of sound parliamentary draftsmanship. On the substance of the Bill, there is really very little that I wish to say at this stage. The essential points have already been made. Many will be repeated, I expect, perhaps with fresh shades of lipstick, if that is not nowadays an impermissibly sexist metaphor.
Essentially this subject raises, as so many areas of law raise, the age-old tension between the competing interests on the one hand of certainty and predictability, and on the other of flexibility. Yesterday, as it happens, we discussed in this Chamber that tension in the context of the Civil Liability Bill, in particular as to the compensation for whiplash injuries. We are described as the whiplash capital of the world. Today, the same tension arises in the context of financial provision following divorce; again, we are described as the divorce capital of the world. What this Bill essentially aims at, just as yesterday’s, is to shift the balance rather further in the interests of predictability so as, among other things, to shorten, cheapen and hasten the resolution of disputes or potential disputes about the division of assets and so forth, when a marriage ends.
For all the reasons so ably and compellingly set out by the noble Baroness, Lady Deech, in her truly brilliant opening of this debate, I am persuaded that it is indeed now time to make this area of our law altogether more predictable than, alas, it has increasingly become over the 40 and more years since the 1973 Act. As to the specific rules, principles, policies, approaches—call them what one will—by which the Bill proposes to further this fundamental goal of greater predictability, I find myself in broad and substantial agreement with its provisions. I look forward to hearing the views of others on certain of the niceties of the Bill and I hope to have a clearer view of my own when eventually we come, as I hope we shall, to Committee. Meanwhile, I wish the Bill a fair wind onward.

Lord Davies of Stamford: My Lords—

Baroness Falkner of Margravine: My Lords, I thank the noble Lord, Lord Davies, for allowing me to continue in the order of proceedings. I commend the noble Baroness, Lady Deech, for her persistence in pursuing this issue over many years. I am also grateful  for the clarity of the briefing that she has provided me with and for her acuity in setting out the purpose and objectives of the Bill so clearly and brilliantly today.
I am not an expert on the issue, but I reflected on it a little, particularly during the case mentioned by so many others today—the Radmacher case—which I recall very clearly. I say very humbly in front of two former members of the Supreme Court that I think the balance in the court’s ruling was correct. Otherwise, I am, I think, the first of the lay speakers to comment on the Bill today. The only interaction I have had with divorce in the past few years has been in the context of the Brexit negotiations; I recall taking issue early on with Michel Barnier when he referred to the Brexit negotiations as a divorce. I think I suggested that divorce law was on the whole rather more thought through than Article 50, particularly in the provisions relating to financial settlements and provisions. My committee, European Union Sub-Committee A, had to deal with that part of the United Kingdom’s settlement, and I can just imagine what it must be like for courts to have to adjudicate on the matters in the Bill promoted by the noble Baroness, Lady Deech. Perhaps the use of a lawyer or two might have benefited the drafters of that part of the Lisbon treaty.
Turning to the Bill, I am sure I am not alone in my frustration that the UK, mainly London, is seen as the divorce capital of the world. I read recently about a wealthy couple who had no relevant connection to the United Kingdom, other than that they had parked some of their wealth in London property. Now that they were contesting a divorce, the significant consideration for one of them to was demonstrate, through the ownership of a flat, that they had a connection to the UK. Their application would, if accepted, presumably lead to a more favourable financial settlement for that person, as opposed to one in the jurisdiction where they had a real and ongoing connection. Jurisdiction shopping in this area has much of the same unsavoury scent as tax evasion, both being the preserve of the global wealthy elite. As the noble Baroness, Lady Deech, said, London being seen in that light is nothing to be proud of.
I have a slight reservation about the Bill in that the financial interdependence of couples varies across such a wide spectrum, from those with modest means to those whose cases make the media—the fabulously wealthy—and between those who need clear and accessible law and those who can afford lawyers and accountants. I am slightly concerned that, in order to provide consistency and clarity in disputes, we are in danger of eroding judicial discretion to an extent that may be undesirable. I say “may be undesirable” with great qualification. My discomfort is particularly to do with the commodification of pre and post-nuptial agreements. I see from legal comment in the media that some advocates see that as the equivalent of taking out life insurance or writing a will. I think the expression used by a lawyer was, “It’s as normal as”. In the real world, I would argue, most people do not take out life insurance or write wills before their wedding day, and the binding nature of these agreements may deter couples at a time of hope and optimism in their lives. My question to the noble Baroness, Lady Deech, and indeed to the Minister, would be about the extent to which they see  a need for a public information campaign about how these agreements work, and the importance of people understanding the implication of financial settlements on divorce before they even get married.
I also have some niggles with Clause 3. I do not have a problem with the binding nature of prenups and post-nups. I think their take-up is relatively limited—for good reason, as most people who decide to marry do so in the desire for a binding commitment to each other for better or for worse, rather than the contractual mindset of, as we have heard in several cases that have been mentioned, for richer and for richer, which are the ones that make the news. However, for prenups as described in Clause 3(1)(c), I am not entirely clear why there is a requirement that the agreement must have been made 21 days before. I assume that this is so that duress on the part of either party is ruled out but, if so, why 21 days as opposed to 30 days or any other timeframe?
The clause also calls for legal advice to have been obtained. I can see the reason for this but, in the absence of funding for independent legal advice, does it not serve as a disincentive towards prenups for those couples who cannot afford that advice? Are there practical suggestions for the Government to devise a toolkit or guidance that could serve as a generic format and be considered independent advice in the absence of a lawyer? I note that the Law Commission has recommended a divorce calculator, and a cursory search on the internet showed up a number of platforms offering calculations. The question would be about the reliability of those tools.
I am in broad support of the Bill. I look forward to its progress, which I hope on this occasion the Government will agree to support. I conclude with a couple of thoughts. Fairness is a difficult and complex concept, inevitably subjective and very dependent on individual circumstances. The important challenge in this area of law is to achieve certainty in general without complexity eroding the flexibility to account for the individual circumstances of the people involved. I think the Bill acknowledges that and, as I said, I look forward to its progress.

Lord Davies of Stamford: My Lords, I apologise to the noble Baroness, Lady Falkner, for having misread the Order Paper and inadvertently jumped the gun. I was in the process of trying to congratulate the noble Baroness, Lady Deech, on her work in this field and on an admirably lucid and, if I may say so, succinct Bill that she has brought before the House. I believe that she is performing a valuable service for the country, for the law and—I will explain what I mean by this in a moment—for Parliament itself. To my certain knowledge she has been engaged in work on this project for three or four years, and I hope that we are now getting to the point where eventual success may be within sight.
In my view, the present state of the law as has been accurately described this morning is, if I can put it in slightly stronger language than has been used, a rather discreditable shambles. The jurisprudence has wandered a long way from the original statute, which people take little notice of, and that jurisprudence varies quite inconsistently and incoherently from one case to another,  as the noble Baroness, Lady Shackleton, has just said, from first hearings to appeal hearings and so forth. That is obviously an undesirable situation for everyone. The law in a free society should be something that everyone can understand. In the present situation in the matrimonial area, it is quite impossible for lawyers to give clear advice to their clients as to the likely outcome of different cases. The fact that it is very difficult to give such advice does not mean to say that advice is not demanded or indeed being paid for at a very high price in many cases, as we have heard, but that highly priced legal advice could be of little value in many cases because of the uncertainties in this area.
Incidentally, I praise the noble Baroness, Lady Shackleton, for the line she is taking on this, because, given her substantial practice in this area, her endorsement to the Bill displays an altruistic and self-sacrificial attitude, and it is admirable when one comes across that.
There is another problem about the state of the law in addition to those already mentioned—which I therefore do not need to go into. That is that the law in its present state has proved to be a valuable and useful instrument for unscrupulous people who want to exploit others by means of fortune-hunting. There have been many cases in the press which have received a lot of publicity, and the one which we all remember from a few years ago was when a woman who had practised for some years as a professional prostitute at quite a high level in the market succeeded in marrying one of the greatest and best-known singers in the world—perhaps the best-known—and clearly expected a considerable dividend from that. She waited for the two years which is not of course statutory but often appears in the jurisprudence to be sufficient to get the full payout and then sued for divorce. She got only £20 million, not the much larger figure that she was expecting, so there is something to be said for that. Nevertheless, I think that £10 million per year is quite good payment, even in that profession. It is not in the interests of the law that it should be abused in that obvious way, which is one more reason for modernising it.
I am delighted that the noble Baroness, Lady Deech, as part of her programme, intends to provide legal backing for prenuptial agreements. Some years ago, I tried in another place to achieve that. I introduced a Bill which received an unopposed Second Reading in the other place but, as often happens to Back-Bench initiatives, it did not make any further progress and I have been waiting for an opportunity to support someone else in the venture. I am delighted that that opportunity may now have arisen.
As the noble Baroness said, the inspiration for her Bill has been many cases in Scots law, which is of course a form of Roman law. It is therefore not surprising that the general picture to which she is looking for us to conform is familiar to the continent of Europe, because all those jurisdictions have provisions much like these. The Scottish position, which says that matrimonial property is property accumulated or acquired during marriage by the two parties, not property received as a gift or inheritance from outside or which is acquired by one of the parties before the marriage, is sensible, coherent and immediately understandable. It is nice to  think that, if the Bill or something like it gets on the statute book, there will be a clear criterion of that kind which everyone will be able to understand.
I make one general point before I sit down. I do not think that Parliament is very good at one of its essential tasks, which is to keep the law up to date. We are actually quite bad at it. When you come across a case where the jurisprudence is out of line with the statute, that is always a warning signal. That means that, in principle, Parliament should be looking at it, but often we do not.
I shall perhaps shock the House by saying that one incident that caused me considerable concern was a change in the law relating to rape within marriage. Under traditional common law, rape was impossible if the parties were married. I disapproved of that and was very much in favour of the law being changed, but I was horrified that the law was changed not by Parliament but by jurisprudence. That was a fundamental change, it was a matter of principle, it was a 180 degree reversal of what had existed before. That seemed to me to be a decision which Parliament should be taking, not the judges.
Another case that shocked me very much relates to the law on the right to die Bill—not the Bill itself, which of course failed in the Commons recently, unfortunately, since I supported it strongly. That was the issue of what happens to relatives and close friends of people who are dying and want to terminate their lives more comfortably and rapidly by going to Switzerland or some other jurisdiction where it is allowed. Are the accompanying relatives or friends guilty of a criminal offence, of aiding or abetting suicide? That is a very important issue, raising all sorts of moral and social problems, as well as some technical, medical issues. It should have been debated by Parliament, and Parliament should have taken the decision. What happened there was even more shocking. It was not the jurisprudence or the judge that determined the issue but the prosecutors—the Director of Public Prosecutions. My right honourable friend in the other place is a man for whom I have the greatest regard, and I think that he took the right decision—but it was completely wrong to get to the point when prosecutors had to change the law. That must be wrong. So Parliament is not good at doing that fundamental job.
We have another case here in which we all agree that the situation is very unsatisfactory. I have always said that the situation is discreditable to Parliament that there should be such a mess as we find in this area of the law. It is very important that in future Parliament makes a conscious effort to do the essential job properly of revising the law from time to time, and not just waiting for the Law Commission to come up with proposals, because on occasions it is far too pusillanimous—and this is one of those occasions. It is our responsibility, ultimately, to decide these matters; it is not a responsibility that we have carried out very well but one that has certainly been taken up in the most proper and effective way by the noble Baroness, Lady Deech. I shall strongly support this Bill as it goes through its various stages, as I hope that it will from now on.

Bishop of Chester: My Lords, I join others in congratulating the noble Baroness, Lady Deech, for her persistence and perseverance in bringing this Bill forward and for her very elegant opening speech.
I have not spoken on divorce in the House before, but on a number of occasions I have spoken about marriage and its place in society, including in a balloted debate just a few years ago. So many of our social problems are exacerbated by the modern frequency of divorce and the break-up of relationships outside formal marriage—key drivers behind poverty, child poverty, homelessness and housing shortages as well as loneliness and all the social and psychological problems that can follow from that. The impacts on children can be variable and are disputed, but nevertheless they are surely real.
Yet we have to be realistic: divorce happens and, indeed, can be the right way forward; perhaps it often is. There are few things worse than being trapped in an unhappy marriage, although I sometimes wish that people started out with a more realistic sense of the inevitable ups and downs, tensions and demands of marriage. A president of the Mothers’ Union was once asked whether she had ever thought of divorcing her husband. “Divorce? Absolutely never”, she said—“But murder? Really quite frequently over the years”.
The Christian church has found divorce a difficult subject. The view developed in the main western branch of Christianity represented by the Roman Catholic Church and those protestant churches that emerged from it, including the Church of England, was that a marriage, once solemnised, was indissoluble. Divorce or annulment were virtually unthinkable, other than in the most exceptional circumstances—as, indeed, Henry VIII was to discover. To this day, the official teaching of the Roman Catholic Church maintains that, unless a formal ecclesiastical annulment is granted, those who are divorced and remarried should not be readmitted to receive holy communion. I am pleased that Pope Francis is pushing back against this, amid a vigorous debate in the worldwide Catholic Church.
Through a rather tortuous process, the Church of England has arrived at an acceptance of divorce, to the point where those who are divorced are usually able to remarry in church, subject to certain pastoral conditions. I warmly welcome that. Indeed, in nearly 40 years of ministry, I have always been willing to avail myself of the provision in the statute law which permitted me to remarry divorced people in church. I recall 30 years ago being severely admonished by the then Archbishop of York for doing so. The secret of success in the church is sufficient insubordination.
Interestingly, the eastern Orthodox churches have always permitted the possibility of remarriage after divorce, because they have always taken a rather different view of the status of vows. In many ways, the western churches have been catching up with the long-established practices of the eastern churches.
I say all this as background to the Bill of the noble Baroness, Lady Deech, which I warmly welcome. I value the flexibility that our common law traditions give, but there must come a point, as others have said,  when Parliament provides a clear legal framework when a great deal of case law has built up over a period of considerable social change. The general withdrawal of legal aid is an important factor here. Couples should be able to seek clearly in law the principles upon which their practical separation and divorce will proceed. We may regret that more people represent themselves to save on legal costs, but it is a reality that is unlikely to change.
I hope that the Bill reaches Committee, and I mention one or two issues that I suggest may need some further examination. I do not think that I have ever said before in your Lordships’ House, “I am not a lawyer, but”, although I have heard that introduction to quite a few speeches in the past. However, I have benefited from comments from some leading lawyers who work in family law—my daughter is a senior lawyer in the City and I was able to glean some advice from her. So if I speak as a fool, as St Paul once put it, I at least try to be an educated fool in what I am about to say.
For my part, I think that prenuptial agreements, if entered into freely and after legal advice, should be recognised as legal agreements, and that has been the direction of travel, as we have noted, although I wonder whether they might be subject to an overall test of reasonableness in the Bill. The noble Baroness, Lady Shackleton, said “fairness”, and I wonder whether some overall test of reasonableness or fairness is required.
There is a sense of course in which prenuptial agreements are in tension with the traditional commitments entered at marriage—for better, for worse and so forth. I certainly do not want to encourage moving to an unduly contractual view of marriage. All is fair in love and war, it is said, and war is not governed by a contract with break clauses. Imagine Britain in 1939 sending a message to Berlin: “We are declaring war, but we would like to see how it is going at Christmas”. There is a certain dynamic in some human activities where you just have to go for it without, as it were, trying to predict everything in advance. Yet the reality is that people today often marry later or with children from previous marriages, and I can see a place for prenuptial agreements in providing a better basis for a new marriage. I would regret if they became too much the norm for all marriages—though I fear that may well be the direction of travel—because there needs to be a certain sense and element of open-ended commitment and, yes, a leap of faith, in our understanding of marriage.
I also accept the general wisdom of seeking to help the people concerned in a divorce to make as clean a break as possible. The Church has moved in this direction in the—fortunately comparatively rare—circumstances of priests divorcing. When this happened in the past, it generally used to be the case that the priest was male and the spouse a female, who had often devoted herself to supporting her husband’s vocation and their family. Divorce in these circumstances was very difficult indeed. Typically, there were few assets to distribute and a diocese would house what one often called “the deserted wife” for life and would provide some maintenance. Nowadays, we seek to facilitate a clean break and provide funds for retraining, if needed, and time-limited help with mortgage payments, where necessary.
I have some hesitations over the details in Clause 5. Why is the age of a dependent child limited to 16? Children these days are often dependent on their parents for much longer than that—I speak from my own experience. Again, five years seems a tight time limit for many folk who need significantly longer to retrain and get established in a career. I would prefer seven or perhaps even 10 years, notwithstanding the possibility of a court granting periodical support for a period of longer than five years.
However, my greatest concerns are about Clause 4. The potential danger with ring-fencing premarital property is with a marriage where most of the assets were generated pre-marriage, and the marriage was perhaps a comparatively long one, perhaps with one party, usually the wife, looking after children and not developing a career. Perhaps the husband had been very busy, which was in practice what needed to happen. Perhaps the income during the marriage had been fully spent on the children’s education. There could be very little matrimonial property to divide in those circumstances, yet one party has substantial premarital ring-fenced assets and the other has given half a lifetime to the marriage but does not have any entitlement to those assets.
The Bill as drafted does not seem to have an adequate safety net—the flexibility to which the noble Baroness, Lady Falkner, referred in her remarks—either for the other spouse or for children. Again, it is limited here to children aged 21. Children in education often go on well beyond 21, so it seems too low an age limit.
These are merely the thoughts of a jobbing Bishop who has been happily married for 40 years—and who, by pure coincidence, will return to Scotland in a year or two.

Baroness Bottomley of Nettlestone: My Lords, it is a pleasure to follow the right reverend Prelate. On this subject and so many others, we so value the Lords spiritual, who help us to set the tone. This is not only about the law but is much more profoundly about the sort of society in which we want to live.
Many have commented on the extraordinary changing demographics, attitudes and expectations of marriage, which makes this piece of legislation all the more complex and timely. I warmly welcome the comments made by the noble Baroness, Lady Deech, a long-standing friend of mine. Indeed, for exactly the qualities we have heard from her today, I invited her 20 years ago to become chairman of the Human Fertilisation and Embryology Authority, a role where attention to the law as well as to the ethics involved was critical. In many ways, that is what unites us today.
There is a wealth of wisdom and experience in this House, and of course I defer to the greater knowledge, wisdom and experience of the noble and learned Lords who spoke earlier. Indeed, I had to go and put on a little more lipstick before coming back in to speak, following the noble and learned Lord’s comments a few moments ago.
I was also particularly pleased to hear from my noble friend Lady Shackleton. Her wisdom and experience are all the more important, and her clarity about why the degree of discretion has become completely  unjustifiable will have registered with us all. As a great fan as a child of Hughie Green’s “Double Your Money”, the words “Open the box or take the money” will stay with me for a long time. However, for many years I have been concerned with family law. In my early 30s, I was chairman of the Inner London Juvenile Court. When I first came to this House I was responsible for the implementation of the Children Act 1989, working closely with the former Lord Chancellor, my noble and learned friend Lord Mackay, and with a long-standing friend and associate now, the President of the Supreme Court, the noble and learned Baroness, Lady Hale, an early and very enlightened thinker on these subjects.
On one occasion I was about to have an Adjournment debate, after my ministerial life was happily over, which again was on a matter of family law and divorce, and I met my noble friend Lady Shackleton and started to cross-question her about divorce, what needed to be reformed and what should change. She entirely misunderstood my intentions and thought I was trying to winkle out some ideas about all her celebrity clients, about whom I knew very little at the time. However, I was preparing for an Adjournment debate, which, in the way of life in another place, started at half-past midnight, and I spoke about these matters. Yes, there has been progress but insufficiently so. The fact that we are debating these matters now in relation to a piece of 1973 legislation suggests a critical mass of weight behind the idea that there needs to be progress.
Having been married for 50 years—I agree with the saying “Murder often, divorce never”—as yet I have no personal experience of divorce, but, like others, I have been closely affected by the experiences of family, friends and far too many constituents. As an MP, I found that often the hardest, most painful and most distressing cases were those involving divorce. I echo time and again that the process often exacerbates the problem. How many people think, “Our marriage has come to an end. It’s not right for anybody that we carry on living together, but we want an agreeable and conciliatory divorce”? However, by the end of the process, if they had not deeply disliked each other at the beginning, all trust and optimism is lost.
It has been argued that since it has become relatively easy to divorce on a no-fault basis, the splitting of a very deep relationship will always involve acrimony and the intensity of feeling gets displaced on to the property or the children. I am not sure about that. Mediation, not having to go to court and proper information being available must all be better for those concerned. Reasonable expectations over fair-settlement outcomes can do much to ease the pain, and that is my understanding of a key purpose of the Bill.
Since the 1973 Act, judges have been presiding over divorce cases at a time of profound societal changes in practice and attitudes towards marriage. However, the argument is that these changes have not yet been addressed by appropriate legislative review and reform, and that has been repeated time and again today. The matrimonial landscape of the UK today looks very different from that of 1973. We have a seen a decline in overall marriage rates, a decline in the proportion of religious ceremonies, an increase in first marriages  relative to remarriages, the introduction of marriage equality, and a dramatic increase in the age at which people marry. The average age in 1973 was 26 for women and 28 for men; by 2015 it was 35 for women and 37 for men, but those figures relate only to heterosexual marriages.
Reports on these trends from the Office for National Statistics are fascinating and particularly informative. However, as I said, despite the changes, judges have been left with essentially the same legislation as was put in place in 1973. The result is the institutionalisation of a system which too often creates confusion, unpredictability and cost, placing excessive interpretive responsibility on judges. The extent of judicial discretion is such that lawyers and, of greater concern, the high number of self-representing litigants find it increasingly difficult to form reasonable expectations about what a fair outcome might look like.
Of course, divorce affects people across the full socioeconomic spectrum. We have talked about high net-worth individuals—some of the celebrated cases. However, the lack of legal aid provision often leaves the less fortunate in an acutely difficult place, where any money spent will come from the long-term benefits they have accrued. It was recently reported by Citizens Advice that 90% of self-representing litigants say how negatively this impacts on aspects of their lives, such as their mental health, their working lives, their finances and their personal relationships.
In a previous debate on this subject and again today, the noble Baroness, Lady Deech, correctly identified that such uncertainty threatens our commitment to the rule of law—a vital pillar of our democracy. The law must be accessible, clear and predictable. To borrow words from the late Lord Bingham of Cornhill, former Master of the Rolls, Lord Chief Justice and senior Law Lord:
“The rule of law does not require that official or judicial decision-makers should be deprived of all discretion, but it does require that no discretion should be unconstrained so as to be potentially arbitrary. No discretion may be legally unfettered”.
It is now evident that change is called for. With judges playing a central part in applying family law, we need to listen carefully to more views from the judiciary on the nature and effectiveness of such reforms. I am not able to say whether the means are the precise way of addressing the ends. I think all of us in the House support the ends and I hope that, in Committee, we can look more carefully at the precise means by which to get there.
Divorce proceedings inevitably occur at an exceptionally stressful and emotional time for those involved and can bring exceptionally difficult consequences for the children. Parental divorce can be particularly traumatic for any child, representing a profoundly distressing and disruptive event in their young lives. However, the extent of this disruption can be dampened or exacerbated by the nature of the divorce, particularly by factors such as witnessing vitriolic settlement proceedings or uprooting them from the family home. On the whole, children can cope with single parents but struggle to deal with enduring acrimony. This is repeated time and again by a wealth of academic literature. Family conflict is a greater cause of depression, anxiety and low self-esteem than divorce. The consequences of  parental divorce on children worsen depending on the degree of parental conflict. Marital conflict that is hostile, aggressive, poorly resolved or concerns the child is particularly destructive and upsetting for children. So apart from the individuals concerned, it is in the interests of children that we examine how the Bill will impact them. I should be grateful for further clarity on the extent to which binding prenuptial and post-nuptial agreements might infringe on judges’ flexibility to prioritise children’s needs.
Improving predictability on the settlement process is a valuable outcome. But what about the distribution of effects that the Bill is likely to have for those in marriages where there is economic inequality between spouses, as in probably the majority of cases? All will have read the comments of Dr Sharon Thompson, of Cardiff University, who said that removing judicial discretion may prove disadvantageous for the economically less-advantaged spouse by diminishing the judicial flexibility to meet their needs through the division of non-matrimonial property.
We must also be wary of inequalities at the point when a prenuptial or post-nuptial agreement is created. As I understand it, these agreements are likely to safeguard the income of the wealthier spouse without compensating their partner for potential career sacrifices which may, in practice, facilitate their partner’s higher earnings. The concern is exacerbated by the reality that the wealthier spouse is likelier to have superior leverage at the time of negotiating these agreements. I hope we can look at this and other matters. Will the Bill diminish the ability of judges to correct for these disparities, except in the prevention of “serious financial hardship”?
I admire and applaud the noble Baroness and all those who have rightly spoken about the purpose and principles of the Bill. The job of the House now, I believe, is to give it careful scrutiny to ensure that there are no unforeseen circumstances, complications or adverse effects, and that we genuinely move to a more civilised and enlightened divorce process, where dividing the spoils does not create greater acrimony than the divorce itself.

Lord St John of Bletso: My Lords, I join others in thanking my noble friend Lady Deech for her tenacity in reintroducing this much-needed Bill replacing Section 25(2) of the Matrimonial Causes Act 1973. It is well accepted that reforms of our divorce laws are long overdue, supported not just by the Law Commission proposals but by Resolution and the Centre for Social Justice.
Coming at the end of the batting order, I fear that almost every point I will make is a repetition of what other noble Lords have said so cogently.
I come to this debate with the experience of having been a divorce lawyer in South Africa—divorce attorney, it was, in those days—where I practised under Roman law, the corpus juris civilis, which is similar to the law in Scotland, respecting that antenuptial agreements are binding, and where many of the provisions of this Bill are incorporated in the divorce law. I also come, sadly, from the experience of having gone through  a long, protracted, painful and expensive divorce. I congratulate the noble Baroness, Lady Bottomley, on having been married happily for 50 years.
Legal certainty is of paramount importance. It is absurd that the development of our divorce law has been evolved through judge-made law which bears little resemblance to the original statute. I find it hard to accept that one of the reasons for the Government’s reluctance to take the initiative for a root-and-branch reform of the law is the need to, in their words, maintain flexibility. It is tempting to bear reference to the Brexit divorce, where the uncertainty has been devastating to both businesses and individuals alike.
Let me touch briefly on the issue of costs, which is a major consideration. Many would argue that the only winners in many divorces are lawyers. The removal of legal aid has resulted in many parties being unrepresented and, without clearer guidelines and legal certainty, has added to the trauma of divorce. Making prenuptial agreements binding, as long as both parties have received independent advice, would certainly remove a great deal of the uncertainty as well as reduce legal costs. I agree with my noble friend Lady Deech that there is no evidence that marriage breakdown is encouraged by prenuptial or postnuptial agreements.
I agree also with the noble Baroness, Lady Bottomley, that often insufficient consideration is given to the harmful impact of protracted and acrimonious divorces on the children of divorcees. All too often attempts at mediation fail because of the current legal uncertainty on the division of post-marital assets. The Bill would provide much-needed scope for successful mediation, reducing the need to go to court, and a far fairer outcome. Clearly there is a strong case for divorce reform which makes the law more predictable and paves the way for swifter, clean-break financial settlements. A medium can be achieved for the provision of more certainty and an element of flexibility. It is shameful that London has the reputation as the divorce capital of the world.
I give this Bill, so ably introduced by my noble friend Lady Deech, my wholehearted support. I hope that the Government can, on this occasion, give more backing to these much-needed reforms.

Lord Davidson of Glen Clova: My Lords, I add my welcome to the Bill of the noble Baroness, Lady Deech, which the Opposition are happy to support.
As the noble and learned Lord, Lord Brown of Eaton-under-Heywood, observed, in many areas of legislation there can exist a tension between statutory predictability and judicial discretion—a contest between predictability and flexibility. As the noble Baroness, Lady Deech, observed, for Scotland, Parliament decided in 1985 in favour of prescriptive predictability regarding the division of assets on divorce. This of course did not drive out all judicial discretion in deciding how the split of finances will fall.
In so far as the Bill has drawn inspiration from Scottish experience, I propose identifying a few caveats that Caledonian experience may suggest; I note my thanks to Ruth Innes Advocate, a family law specialist in the Scots Bar. First, however, I commend the Bill,  which now includes the five-year period for periodical payments. The Scottish experience suggests that the three-year period is often too short. Furthermore, it is seen to impose a real obstacle to extending the period, even where overall fairness might so dictate. The Bill’s proposal of a five-year period is seen as an improvement on the Scottish experience. The noble and learned Lord, Lord Hope of Craighead, identified this as an area of reform in the Supreme Court cases already referred to—Miller and McFarlane—way back in 2006. Unfortunately, the Scottish Parliament has not yet seen fit to reform the three-year period.
For all the advantages of the predictability in Scots law regarding financial provision, I, with Miss Innes’s assistance, have identified three particular caveats. Where there is a potential competition of jurisdictions for divorce—as between England and Wales, and Scotland—I understand that the economically stronger party is generally advised to raise proceedings in Scotland but the economically weaker party is advised to do so in England and Wales. Thus Scotland is seen to favour the economically stronger party, by way of the 1985 Act. This is partly a result of the three-year period for periodical payments, as well as the practical exclusion of pre-marriage assets from the assets for division.
The second caveat is that the 1985 Act inevitably required a setting-down process, as with all legislation. That produced the other cases that identified and clarified the law, which identified some areas of concern where the law has become somewhat frozen, by reference to these earlier cases shortly after the 1985 Act. These early test cases have tended to discourage later appeals for the usual reasons of cost and risk. The concern is that the freezing of the position may be at the wrong points established by these earlier judicial decisions. To be clear, the concern is for the interests of the economically weaker party.
The third caveat relates to the somewhat rigid definition of “matrimonial property” that has, from time to time, produced outcomes regarded by practitioners in Scotland as unfortunate. For example, in cases of a high-income lifestyle but a low accumulation of assets, the economically weaker party can suffer a dramatic downturn in living standards while the high-earning party can maintain their standard of living. This is seen as an undesirable outcome in situation—a point partly referred to earlier by the right reverend Prelate.
However, none of these caveats should detract from the support given by these Benches to the Bill. My observations point us to where problems may arise and, perhaps more helpfully, where problems may be avoided. The Bill’s principles of equality, clarity and fairness plainly deserve support, which these Benches are happy to provide.

Baroness Vere of Norbiton: My Lords, I congratulate the noble Baroness, Lady Deech, on securing the Second Reading of her Bill. Indeed, I thank her for all the work she has done, and no doubt will continue to do, in this vital area. Although currently much maligned, it is a strength of your Lordships’ House that noble Lords such as the noble Baroness, Lady Deech, with a  passion for and deep understanding of an issue, can work tirelessly with Governments of all persuasions to encourage reform. It has been my pleasure to listen to your Lordships today. I thank all noble Lords for the insight they have brought to the debate. I will encourage my colleagues in the MoJ to study them carefully.
The resolution of financial matters is one of the many challenges of divorce or civil partnership dissolution. Although there are differences of opinion within your Lordships’ House and beyond, it seems that there is an agreed and twofold objective: that the process should be as supportive and clear as possible, and that the outcome for both parties and any children involved should be fair.
From the debate it is very clear that there is consensus among your Lordships that reform of the law governing divorce finances is overdue, but it is also the case that consensus on the type of reform is not universal. The President of the Family Division, Sir James Munby, who, as the noble Baroness, Lady Deech, noted, favours reform, also recently observed that,
“views on what form such reform should take are sharply divided”.
It seems that this divide comes from the differences of opinion about how we should balance the law. We can all agree that the current legal framework gives the court wide-ranging flexibility in making financial orders and that judges skilfully exercise that flexibility and discretion every day. For those who see the virtue of the existing law, that flexibility allows for fairness. For those who see a problem with the law as it is, that same flexibility makes for uncertainty. For example, the noble and learned Baroness, Lady Hale, the President of the Supreme Court, has suggested that, sometimes, open-ended periodic payments are the only way to,
“give each party an equal start on the road to independent living”.
It is clear to me that the breadth of views, including from those at the very top of the legal profession, warrants careful consideration by the Government.
Rebalancing a law such as this—if we are satisfied that it needs rebalancing—cannot be an easy undertaking. The law—one law—must allow the court to deal equitably with the widest range of cases, from shorter marriages of young people, both with successful careers and great prospects, to longer marriages of older people where it was jointly decided that one of them should give up a career to build a home and raise children. Here I must note that, although there might be a perception that the law is out of step with how men and women live their lives today, the law is gender-neutral. Equality of spouses is in statute, so how does it get put into practice? One might conclude—indeed, some have alluded to this—that it is not the law that needs to change but the attitudes of some of those who apply it.
It is clear that the law must retain a measure of flexibility. The question before your Lordships’ House is how much flexibility is needed to allow the court to make orders that are fair to both parties in a very wide range of cases and circumstances. This must be balanced with the need to provide greater certainty about financial outcomes to inform and manage the expectations of the separating couple. The Government want to encourage couples to agree financial arrangements themselves where it is appropriate and safe for them to do so.
In 2014, the Law Commission noted criticism that the law on financial needs was not always consistently applied, but it concluded that the law on this did not need statutory reform. Instead, it recommended that the Family Justice Council prepare guidance on the meaning of “financial means”. The Government listened and took action. With government funding, the Family Justice Council produced detailed guidance for the judiciary and legal practitioners. The noble Baroness, Lady Deech, commented on the guidance’s complexity, but it is for those with the skills and experience to deal with complexity, not for the divorcing couple. It was only relatively recently that this work was completed—indeed, within the last few years. It is only right that we give it time to bed in. If, in due course, it is decided that it is not fulfilling its purpose, perhaps it will need to be reviewed.
There is good guidance for the divorcing couple—a topic mentioned by the noble Baroness, Lady Falkner. The Government produced an excellent guide for divorcing couples to help them agree their finances. The guide, Sorting Out Your Finances When You Get Divorced, is accessibly written, is just 50-odd pages long, is well presented and has been available since September 2015. It explains the options available and how the court makes decisions, so that divorcing couples can have a realistic perspective on their separate financial futures.

Baroness Shackleton of Belgravia: I need to repeat the difficulties presented by that document when the judges applying it do not agree. When you are advising somebody and want somebody to mediate an agreement, or when you are faced with a client who comes into your office and says, “What should I settle at?”—it does not matter if you are dealing with a pro bono person or somebody who can afford many times most people’s annual income—if the adviser cannot predict the outcome because judges apply the same rules differently, we are in big trouble and a settlement cannot be agreed. Therefore, there is a delay; therefore, there is uncertainty; therefore, people get upset and, therefore, children become involved or get disaffected. Most people can deal with things when they know what it is; they cannot deal with uncertainty and delay. The cost of finding out the solution from the document that has been produced is not working.

Baroness Vere of Norbiton: I thank the noble Baroness for her insights on that. To a certain extent, the Government agree. It is why we have been working with the Family Justice Council and are continuing to look at this area. We want to make sure that everything is in alignment. Everything has eventually to be in alignment, whether that be the decisions of the judges or the expectations of those going in front of them and seeking a fair divorce.
Returning to the guide, I wish I had seen it when I went through my—thankfully—only moderately costly divorce. Reaching a financial agreement is very stressful, as I think all divorcing couples can attest. The further away from judges that agreements between the individuals can be reached, the better it is.
I return to flexibility and certainty, as mentioned by the noble and learned Lord, Lord Brown, my noble friend Lady Bottomley and the noble Lord, Lord St John of Bletso. In any reform of the law to balance flexibility  and certainty, the Government need to be sure that a proposal would achieve what it sets out to do and would not cause unintended difficulties. Given the complexity involved in disentangling the finances of a shared life and the impact of any changes at a personal level, the Government are keen to see a solid evidence base for reform. We are very open to reviewing any and all evidence from the noble Baroness, Lady Deech, or any noble Lords. Put simply, we all want to get this right.
I acknowledge that noble Lords have pointed to the model of Scots law. I am grateful to the noble and learned Lord, Lord Davidson of Glen Clova, for his comments on its operation and some of its consequences. The noble Baroness, Lady Deech, has drawn attention to research by Professor Jane Mair and others on how the Family Law (Scotland) Act 1985 has worked in practice. A proposal to amend English law in line with Scots law may well appear attractive. I am conscious, however, that there are dissenting voices among the judiciary, family law practitioners and beyond—and, perhaps as significantly, in another place. If the Government conclude that the law in England and Wales needs reform, whether of the duration of periodical payments or of the matters that a court must consider, we must take account of the provisions as a whole and the effects of any changes.
The so-called “big money” divorces mentioned by many noble Lords make for eye-catching tabloid headlines, and I appreciate that several of your Lordships think that awards have been overgenerous. One might also conclude that because such cases come to our country and to the English courts demonstrates perhaps our laws in this jurisdiction are fair, and that the impartiality of our judiciary is highly regarded. But such cases are small in number and a world away from the circumstances faced by the vast majority of divorcing couples.
The question for government is where any reforms would leave more typical cases, perhaps those involving people of an age at which it would be difficult to return to their former career, be that a man or a woman. Couples who have no intention of divorcing make decisions in the expectation of a long-term partnership. These decisions then have serious repercussions on one or more of the parties when, against their initial expectations, their marriage breaks down. With all this in mind, I now turn briefly to the detail of the Bill.
Clause 2 defines matrimonial property—in broad terms, this is property acquired during the marriage but not, for example, from an inheritance—and seeks to exclude property acquired before the marriage from consideration as an asset when financial orders are made. The Government’s concern remains that this could cause hardship if someone’s financial needs could be met only if assets that the other spouse had acquired before the marriage were included.
Clause 3 seeks to make nuptial agreements enforceable on condition of certain safeguards. The Government are considering a similar recommendation, made by the Law Commission, which has additional safeguards. I note the comments of the right reverend Prelate the Bishop of Chester, suggesting a test of reasonableness or fairness when making an agreement, and the need for independent advice, noted by the noble Lord,  Lord St John of Bletso. We are considering introducing nuptial agreements and we will make our position known on this recommendation in due course. If the Government decide to go ahead, we will of course give consideration to the guidance needed for couples, as mentioned by the noble Baroness, Lady Falkner.
Clause 4 sets out a presumptive 50:50 split of property. People do not, of course, always leave a marriage equally. One partner often has better employment prospects. One partner is often expected to shoulder most of the caring responsibilities. The existing law allows for redistribution of assets to make up for this. The Government remain concerned that changing the law in the way proposed could have an adverse effect on the financially weaker party and their transition to full financial independence.
Clause 5 seeks, in part, to limit the duration of periodical payments to five years,
“unless the court is satisfied that there is no other means of making provision for a party to the marriage and that that party would otherwise be likely to suffer serious financial hardship as a result”.
I appreciate that periodical payments often draw headlines, being called “a meal-ticket for life” in divorce cases that involve the more affluent. However, it is worth noting that most people do not, in fact, apply for periodical payments when they divorce. It is important that one type of divorce should not cloud the debate around what happens to those of more limited financial means. We have, it is important to say, common ground in wanting to support people to move to financial independence. The Government are not persuaded, for the time being, that the existing law does not support this objective. However, as I said previously, we are happy to review any evidence that comes to light.
On Clause 6, the Government continue to believe that the existing provision on taking a party’s conduct into account remains adequate.
I have outlined the Government’s reservations about the Bill, but I want to focus on where we agree. While the Government’s position on the accessibility of the law and the clarity that it offers divorcing couples may differ from the position of the noble Baroness, Lady Deech, we all want the law to support couples and encourage a fair outcome. I am conscious, too, that other individuals and groups have also shown an interest in divorce finances, and the Government will wish to take a range of views, and solid evidence, into consideration if we conclude that reform is necessary. My honourable friend Dr Phillip Lee recently said in another place that he is hopeful that the Government can work across the House and beyond as we continue efforts to improve the family justice system. This remains true. It would not be helpful to approach consideration of reform in any partisan way.
I am aware that I have spoken at length and may not have covered as many points as I would have liked, but I really wanted to set out the Government’s position. If I am able to add more colour, I will write to all noble Lords who have spoken today. I acknowledge the mood on all sides of this House and the strength of support for the Bill. I assure your Lordships that the Government will reflect on all that has been said today.

Baroness Deech: My Lords, as you would expect from this House, a wealth of wisdom and experience has been shown. Some of the prime movers in some of the most important cases of recent years are right here and have spoken in support of the Bill. There has been support from right around the House, including from the Bishops’ Bench—what more does one need?
Before I address the government response, the main worries expressed by those who have spoken were about prenups. The Law Commission looked into this very thoroughly. There is actually a draft Bill appended to the most recent Law Commission report on this. If one is looking for consensus, one could pick up that Bill, already drafted, and run with it. I think it has a little too much uncertainty in it but there is no lack of consensus on the need to have prenups and the fact that they will not do any harm.
The other note of contention—not so much about discretion and statute, because we have that in every area of the law—was about the weaker partner. This brings me to something that I can only touch on lightly, which is how we see women today. In most other countries where they have a system like the one I have put forward, women actually feel less discrimination and have better childcare and more equal pay. There is a close relationship with the insistent message from some lawyers and judges—and, regrettably, some younger academics who are reinventing the wheel—that women are victims and women are suffering.
We changed the divorce law to “irretrievable breakdown” in 1969 and the message should have gone out to women then that, “You cannot expect to stay married because if your partner wants out he will go and there is nothing to stop him”. It is a bit late now to say, “If you are a housewife and you have given up your career to look after your children, a man will have to keep you”. He may not have any money. He may remarry to someone who is equally deserving. In our society now the Government say that women should take half of all positions on boards, should form half of the judiciary and should be in the Supreme Court—women should be running the world. I agree with that but you cannot at the same time say, “It’s all right. You will be kept. You don’t have to pursue a career. You are a victim”. We have to get away from this victim mentality and see women as equals.
To the Government I say: lack of consensus has never stopped the Government pursuing a reform if that is what they want to do. We can all cite many examples of that. I put forward a suggestion this year that we should have a Select Committee on family law, which would have brought the attention of the House to bear on these matters and maybe produced a consensus, but I am sorry to say that that notion was turned down in favour of what I have previously described as some motherhood and apple pie Select Committees in this Session.
The guidance that the Minister referred to has never been cited in a case—it has not achieved any sort of consensus, as the noble Baroness, Lady Shackleton, pointed out—nor has the guidance which is put forward for litigants, or they would not be weeping in court, as I have seen them do, and spending so much money.  It has not worked. The Government are missing the point if they think that that guidance is going to help. Anyway, what sort of condition is the law in when you have to set it to one side and turn instead to guidance put together by the Family Justice Council? It is not binding and it has not helped.
The Minister said we need evidence. We have a wealth of evidence from the whole of the western world: Europe, America, Canada and, most notably, Scotland. It has worked there since 1985. The evidence in the report Built to Last shows that no more women are going on social security than before. The evidence is there. England is an outlier. This is not a situation to be proud of. Why not get on with it? The more years that go by, the worse it will be. The money that is wasted on  legal costs would rescue many middle and lower-income couples from the penury that they might otherwise face on divorce. So I am not satisfied with the government response. I think they will find that the public are not satisfied with their response. When this is covered in the media, they will find that the weight of opinion is against the “make do and mend” attitude that we have just heard.
On that note of severe dissatisfaction, I ask the House to give the Bill a Second Reading.
Bill read a second time and committed to a Committee of the Whole House.
House adjourned at 2.20 pm.